The Reserve Bank of Australia (RBA) has announced a 25 basis point rate cut, bringing the official cash rate down to 4.10%.

This is the first rate cut in over four years, offering some relief to mortgage holders. But what does it mean for homeowners, investors, and the property market?

Let’s break it down.

Why did the RBA cut rates?

The RBA made this move because inflation is easing faster than expected.

Here’s what influenced the decision:

✔ Lower Inflation – Inflation dropped to 3.2% in the December quarter, moving closer to the RBA’s target of 2–3%.

✔ Weaker Consumer Spending – Australians have been tightening their wallets, reducing demand across the economy.

✔ Slower Wage Growth – While wages are still rising, the pace has slowed, easing concerns about long-term inflation.

Will there be more rate cuts?

The RBA says it wants to see more positive data before making further cuts, especially with the job market still performing strongly.

How will this affect homeowners?

Good news for mortgage holders! Most major banks—including NAB, Westpac, CBA, and ANZ—have announced they will pass on the full 0.25% cut to borrowers.

What this means for your mortgage

► If you have an average home loan of $641,416, your repayments will drop by around $103 per month.

► When will you see the savings? It depends on your bank—changes will take effect between February 28 and March 4.

► If you want to pay off your mortgage faster, consider keeping your repayments at the current level.

However, surveys show that 40% of borrowers need at least a $500 monthly reduction to feel real financial relief—so this cut may only help a little for some.

Impact on the property market

Lower interest rates generally mean:

✔ More Buyer Confidence – Lower repayments make borrowing more attractive, which could boost demand for homes.

✔ Higher Property Prices? – If borrowing costs keep dropping, more buyers may enter the market, potentially driving up prices.

✔ Better Conditions for Investors – Investors may be encouraged to re-enter the market, especially if rents remain strong.

However, the RBA is taking a cautious approach—so we may not see another cut for a while.

What should you do next?

If you have a mortgage:

► Check with your lender – Make sure the rate cut applies to your loan.

► Consider refinancing – There may be better deals available.

► Think long-term – If rates drop further, property prices could rise. Now might be a good time to plan ahead.

While this rate cut brings some relief, the RBA is watching inflation and the economy closely before making any further moves.

Thinking about buying or selling? Let’s talk!

With interest rates falling, the Melbourne property market is heating up—and now could be the perfect time to make your next move.

Contact our expert team today for a free consultation and market appraisal. (03 9885 6688)