How a potential rate cut could impact the housing market.

With last week’s announcement, the Reserve Bank of Australia (RBA) decided to keep the cash rate at 4.35 percent.

Now, all eyes are on when the first-rate cut might happen.

Chris Collard, Director at FinancePath, believes that a future rate cut will make a big difference in boosting confidence among potential buyers. “While a rate cut would give existing borrowers some extra cash flow, the biggest effect would be on confidence for those thinking about buying—whether they’re looking for a home or an investment property,” says Chris.

“We see it in our business every day! We have over $30m of pre-approved loans for clients who are prepped and ready to grab opportunities in the marketplace. They have acted before interest rates start to drop next year. With an aim to get a jump on those who are waiting for rates to drop before doing anything.” he shares.

“Our advice has been clear for a while: if you can afford it, have a good cash buffer, and plan to buy within the next 12 months, why wait? When confidence grows after rate cuts, we expect competition in the market to pick up, which could lead to a slight increase in prices.”

The RBA’s latest statement shows they’re taking a careful approach to managing inflation, aiming to get it down by 2026. This means we likely won’t see a rate cut right away, but many expect one in early 2025. This anticipation has both borrowers and investors rethinking their next steps. “A lower rate could make investing in property more appealing, especially as people find they can borrow a bit more with a reduced rate,” Chris explains.

Chris also notes that timing is key.

“With the current economic outlook and the RBA’s caution, a rate cut before year-end isn’t likely, especially with holiday spending and inflation concerns. Early 2025 is a more realistic timeline to see how these changes might play out,” he says.

While some experts think a small rate cut might not change much, Chris is more optimistic. “Even a small cut could spark more market activity. It might not cause a big rush, but it would help build confidence gradually and get more buyers interested,” he adds.

“Our view is that the best time to act is when you can afford to. If you understand your numbers and have contingency plans in place, don’t follow the herd.”

Want to explore your options in today’s market?

Call us at FinancePath on 1300 780 440 or book a 10-minute chat to discuss how we can help you make the most of these changing conditions.