The Australian property market is likely to shift as major banks forecast interest rate cuts by the RBA. Such predictions have mortgage brokers and property investors on high alert anticipating changes when it comes to borrowing limits and pricing.  

Rate Cut Forecasts By The Big Four Banks  

• The Big Four CBA, Westpac, ANZ and NAB have collectively changed their forecasts to include at least 3 rate cuts within the following year. CBA economists predict at least 3 cuts in 2025 with the cash rate sitting at near 3.1% by the end of the calendar year.  

• Westpac economists also expect this sort of trajectory, predicting multiple cuts in the upcoming year with their estimates forecasting cash rate to as low as 2.6% by early 2026.  

• ANZ economists have corroborated major banks, predicting 3 25 basis point cuts in 2025.  

• NAB's modified forecast expects a decrease of 50 basis points in May 2025, with further reductions of 25 basis points in July 2025, and August 2025, before settling in November 2026 and February 2026.

These changes are set to decrease the cash rate to 2.6% by the year 2026.  

Expected Changes to Borrowing Power and Property Value Inflation

These changes will dramatically increase the estimated borrowing capacity and value of the property. With increased credit lending, borrowers who need funds for spending will be able to access 20% more than previously available. For mortgage holders, this translates into meaningful savings. For example, a million-dollar loan would result in paying $15,000 more over the term of the loan, significantly reducing the cost of borrowing.

The increased available credit is likely to spark another surge in demand or “FOMO” for properties, leading to a newfound “property supercycle”. This surge in demand will further inflate the price, fueling a surge in inflation.

Market Sentiments and International Factors  

The outside elements are also considered regarding the projected cut measures. World trade disputes between countries, economic paranoia, and Trump's taxes allow them to loosen the monetary policy. These worries led the Reserve Bank of Australia to a relaxed spending policy.  

Having a relatively small and open economy, Australia is reactive to changes in the global economy. The most recent forecasts suggest a possible interest rate cut by the Reserve Bank of Australia (RBA). The NAB is even contracting a 50bps reduction to May 2025, citing weakening inflation and a slowdown in global demand (source).

Further along this sentiment, ANZ has decreased the deposit and lending rates. Westpac’s Preparing for looser monetary policy signals that the financial sector is heading towards a more relaxed policy. (Yahoo Finance, Broker News)

Mortgage brokers are rapidly adjusting, promoting the pre-approval process, refinancing at lower rates, and utilizing favorable loan structuring due to changing market conditions. Strategic refinancing is gaining traction as a viable option for homeowners and investors amid volatility.

With OM Financial’s premium mortgage services, you can stay ahead of the curve. We help you overcome the challenges of rising property prices with bespoke advice, so you get the best rates and opportunities. For professional assistance with your next home loan or investment strategy, please book an appointment or contact us at 478 876 967  to get started .