![\"Annual](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/Annual-change-in-inflation-and-wage-price-800x383.jpg\")
<\/p>\nToday's 25 basis point cut to the cash rate marks a further shift toward more accommodative monetary policy.<\/p>\n
With both headline and core inflation now within the RBA's 2\u20143% target range \u2014and no signs of a wage-price breakout despite ongoing tightness in the labour market \u2014 the RBA's decision to lower\u00a0rates for the second time in three meetings was widely expected.<\/p>\n
<\/p>\n
Borrowers are likely to benefit from this move through lower mortgage rates.<\/p>\n
The average variable rate for outstanding owner-occupier loans is expected to fall to\u00a0around 5.81%, reducing repayments on a $750,000 loan by approximately\u00a0$81\/month.<\/p>\n
Beyond the immediate financial relief, the rate cut is also expected to lift consumer confidence.<\/p>\n
While the Westpac\u2014Melbourne Institute monthly sentiment index has shown some volatility \u2014 particularly following the Liberation Day tariff announcements \u2014 historically rate cuts have tended to boost sentiment.<\/p>\n
![\"Consumer](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/Consumer-sentiment-v-volume-of-dwelling-sales-May-2025-800x450.jpg\")
<\/p>\n
This combination of lower interest rates and improved sentiment is likely to support increased activity in the housing sector, given that there is generally a correlation between consumer sentiment and home sales volumes.<\/p>\n
We may also see continued upward pressure on housing prices, extending the broad-based recovery in values that began after the February rate cut.<\/p>\n
That said, we don't expect a significant acceleration in capital gains.<\/p>\n
Several factors continue to constrain price growth, including stretched affordability, cautious lending practices, and the reality that despite 50 basis points of easing, interest rates remain in restrictive territory.<\/p>\n
![\"Rba](\"https:\/\/cdn.propertyupdate.com.au\/wp-content\/uploads\/2025\/05\/RBA-cash-rate-target-and-pre-covid-averages-800x418.jpg\")
<\/p>\n
While lower rates should help to make housing more accessible, further upward pressure on prices would offset the benefits of improved loan serviceability.<\/p>\n
Each of the four housing affordability metrics published by Cotality was either at record highs or equal record highs at the end of last year, a reminder of the challenges many prospective home buyers face.<\/p>\n
Today’s 25 basis point cut to the cash rate marks a further shift toward more accommodative monetary policy. With both headline and core inflation now within the RBA’s 2\u20143% target range \u2014and no signs of a wage-price breakout despite ongoing tightness in the labour market \u2014 the RBA’s decision to lower\u00a0rates for the second time…<\/p>\n","protected":false},"author":32,"featured_media":51973,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,1118],"tags":[572,1183],"class_list":["post-189253","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-property-updates","category-news-and-features","tag-feature-featured","tag-homepage-top"],"acf":[],"yoast_head":"\n