Flemings Property Services has welcomed the Reserve Bank of Australia's (RBA) decision to reduce the cash rate by 25 basis points last week, the first rate cut since the end of 2020.
In November 2020 the RBA reduced rates to a historic low of 0.1 percent with 13 increases occurring over 15 months since May 2022 settling in at 4.35 percent over the last 12 months.
Managing director of Flemings, Justin Flemings said the latest cut, bringing rates down to 4.1 percent, is set to benefit the property market with increased buyer confidence and reduced borrowing costs.
"The RBA's decision provides some relief for the property market," Justin said.
"Lower interest rates improve affordability for buyers and renewed optimism for sellers.
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"This is a turning point for the market, and we expect to see increased activity as a result."
Director of Highlands Funding Paul Goldsmith said it would particularly be a boost for first home buyers.
"A rate cut means real savings for mortgage holders, about $80 per month for every $500,000 borrowed," Paul said.
"It's a boost of course for first home buyers, and also transitioning buyers - those selling and buying a new home - as many previously purchased when borrowing was much easier.
"Higher borrowing capacity, especially if more cuts follow, should give all buyers a material kicker."
Paul also said the cut is great news for business owners as well.
"Businesses will benefit too, both from lower interest costs and extra cash circulating in the economy," he said.
"For mortgage holders, real relief is likely a cut or two away.
"With two RBA meetings in the next three months, we'll get a clearer picture soon, but any rise in inflation could slow things down."
Banks that pass on the full rate cut based on an owner-occupier paying principal and interest on the average variable rate of 6.33 percent with 25 years remaining on the loan could see monthly savings of $61.69 for a $400,000 loan, $77.11 for a $500,000 loan, $92.54 for a $600,000 loan and $107.96 for a $700,000 loan.
Justin said the rate cut presents an opportunity for buyers, investors and sellers to make confident moves in the market.
For more information about the RBA’s interest rate cut, visit: https://www.rba.gov.au.
For more information about your local property market, contact any of our local agents in Boorowa, Harden, Cootamundra, Young and Cowra.
