RBA Cash Rate Cuts to Boost Housing Market

The Reserve Bank of Australia (RBA) has cut the cash rate for the second time this year, reducing it by 0.25% to 3.85%. This is the first time the rate has been below 4% since 2023.

RBA Governor Michele Bullock made the announcement, stating that the cut comes at a time when home prices are already showing strong market growth. The median house price nationally rose by 0.4% in April to reach $917,433, representing an annual growth rate of 5.2%. Unit prices increased by 0.5% to $685,637, delivering a yearly growth rate of 4.6%.

Borrowers with a $600,000 loan can expect to see monthly repayments drop by $91 if the banks pass on the cut in full, according to comparison site Canstar. Those in regional Australia, with a loan for a median priced dwelling of $538,698, would see their minimum loan repayments decrease by $82 per month.

Ray White Chief Economist Nerida Conisbee stated that the rate cut will direct additional money into the housing market, providing borrowers with increased capacity. She also noted that markets are pricing in additional cuts through the remainder of the year, which will continue to support price growth.