February 28th, 2025The rate cut – what it means for the region

The region’s real estate agents have responded with cautious optimism following the Reserve Bank of Australia’s interest rate cut – dropping the cash rate by .25 per cent. 

The February 18 decision – dropping the cash rate from 4.35 to 4.1 per cent – will help ease pressure on mortgage holders, but many hope the official cash rate will fall further. 

With the major banks agreeing to pass on the 0.25 per cent cut in full to variable rate customers, it is estimated that a household with a $500,000 mortgage would save about $77 a month, a household with a $750,000 mortgage $115, and a household with a $1 million loan about $155 a month in repayments. 

Belle Property Daylesford and Trentham principal director Will Walton says the RBA decision is a welcome move for property owners with a mortgage and buyers looking to consider entering the market. 

However Will did also note the diversity of personal situations which exist within the region with some households struggling to meet rents and repayments, while others do not stand to benefit so much from the cut. 

“A portion of our local population are potentially self-funded retirees with no mortgage,” Will acknowledged. 

“Certainly, once confidence is stimulated, we should see more real estate transactions in our local market. A number of very generous first home buyer programs are on offer and we recommend first home buyers investigate these offers with their financial lender or bank. Bendigo Bank certainly has all the detail.” 

Creswick real estate agent Katie Minchinton of Katie Minchinton Property said the cut was good news. 

“The Reserve Bank has cut rates to 4.10 per cent – the first reduction since 2020,” Katie said. 

“This could be the perfect moment to step into the market or make your next move. Don’t miss out on new opportunities. 

“It’s certainly very good news. We’re looking forward to great growth and more confidence in our market in the near future.” 

Rob Broadhurst of Broadhurst Property said the decision to cut the cash rate to 4.10 per cent marked a significant shift in economic policy. 

“While this move offers welcome relief for mortgage holders, its impact on the Macedon Ranges and surrounding property markets remains to be seen,” he said.

“The RBA’s decision reflects growing confidence that inflation is stabilising, with headline inflation recorded at 2.4 per cent in December 2024, well within the target band of 2–3 per cent.

“However, despite this rate cut, many households will still face financial challenges due to ongoing cost-of-living pressures. 

“For the regional property market, the rate reduction should help stabilise home values, halting the incremental declines seen in Melbourne over recent months. 

“However, while lower interest rates can make borrowing more attractive, prospective buyers remain cautious. Rising costs across multiple sectors, including energy, groceries, and services, mean many households are still hesitant to stretch their budgets. 

“As a result, while the rate cut may encourage more buyer activity, it is unlikely to be a silver bullet for rapid price growth in the immediate term.” 

Frances Harkin of Harkin Estate Agents in Trentham said as interest rates decreased, there would be restored confidence and momentum in the property market. 

“Regional areas particularly remain a strong and desirable market. A rate cut in 2025 could drive increased buyer activity, making it an ideal time for sellers to position their properties strategically,” she said.

“If you’re considering buying or selling, staying ahead of market shifts will be key to making the most of upcoming opportunities.” 

In an article in Australian Property Update, CoreLogic Head of Research Tim Lawless said the cut was significant, but “arguably the greater effect on housing markets will be the confidence injection received from the commencement of the rate-cutting cycle” . 

“Measures of consumer sentiment have already shown a solid rise through the second half of 2024 as households became more certain the rate-hiking cycle was over and the outlook for household finances started to improve. 

“Historically, there has been a clear relationship between changes in consumer sentiment and home purchasing activity.” 

PropTrack Senior Economist Eleanor Creagh agreed.

“Both buyer confidence and borrowing capacities will be boosted now interest rates have begun to fall,” she said.

“As a result, the price falls seen over the past two months are likely to be short- lived and may reverse with the slight improvement to affordability and buyer confidence driving renewed demand and price growth.” 

Words: Eve Lamb & Donna Kelly | Image: Kyle Barnes