What will rate cuts mean for homeowners and buyers?

Earlier-than-expected interest rate cuts could see an uptick in property demand, which means aspiring buyers and existing homeowners need to get their finances in place, advises Craig Betalli, Senior Finance Specialist from Our Broker.

Craig says the combination of mortgage and cost of living stress on some market sectors is fuelling talk of cuts. “As we seem to have inflation under control, there’s a prevailing view that interest rate cuts will make the lives of some Aussies a bit easier.”

Whether there is a rate move by the Reserve Bank of Australia this month or in April, cuts are coming, and for homeowners, now is the time to carefully look at the interest rate you’re paying and whether you could do better with the help of a finance specialist such as Our Broker.

Typically, there is talk of 25 basis point cuts. However, if your bank decides not to pass on the full rate cut—either to maintain their margin or due to their funding costs—this could be a signal to contact your broker. Craig adds that a rate cut is an opportunity to reassess your situation and ensure you’re on the best deal.

“What was the best deal 12 months ago may no longer be the most competitive option now.”

For buyers, whether you’re a first-timer or upgrading to a larger property, a rate cut can boost your borrowing capacity. According to Our Broker, a 25-basis point cut could increase your borrowing potential by up to $30,000. If more cuts follow, the impact on your capacity could be even greater.

The downside, however, is that some buyers are holding off in anticipation of a rate cut. This pent-up demand could trigger a run in the market. So, waiting for a rate cut might mean you end up paying more than you would if you take action now.

Therefore, getting a preapproved home loan is crucial when the right property comes along, advises Craig. This means contacting your broker and understanding the process, costs, and options available.

A pre-approval is a preliminary loan assessment with a lender to determine the likelihood of securing finance for your property purchase. Craig adds that a finance specialist, such as Our Broker, can help you find the right lender and ensure you secure the best deal for your property purchase.

To get ready for a rate cut, whether you’re a homeowner with a mortgage or looking to finance your next property move, contact Our Broker today at 1800 913 677.