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While the RBA has previously indicated a willingness to cut rates further, recent data and comments suggests the economy might be turning a corner, which could influence the timing of any future adjustments.
Understanding these dynamics is key for anyone with a mortgage or looking to enter the property market.
Why the RBA Paused in September
After cutting the cash rate last month, and the third time this year, the board is now taking a moment to assess the impact of its recent monetary policy decisions, particularly on inflation, employment, and overall economic growth.
Speaking on Property insight’s Monthly Economic Update, Mark Bouris said that the RBA’s approach has shifted.
“The Reserve Bank’s made it pretty clear that these days they want to see the whole board. They like to see that data.”
“They want to see the actual effect on inflation, not just what the money market is predicting.”
Stephen Koukoulas discussed the shifting economic indicators that are influencing the RBA’s thinking.
Koukoulas noted that while the economy is “a little bit better, definitely better than it was, but it’s a long way from perfect.”
“GDP is at 1.8% now, that was 0.8% a year ago,” he said.
“Building approvals running at about 17,000 a month, that was around 12,000 a month just a year ago.”
“Household spending is at 5% annual growth, that was 3% 12 months ago… the economy is a little bit better, but we’re not back where we can sort of put our hand at our heart, say the economy is good.”
This improvement presents a “perverse thing” for borrowers, as Mark Bouris explained.
“The worse the economy is, the more likely it is that borrowers are going to get a rate cut. The better the economy is, the less likely it is going to get a rate cut.”
The financial markets have already reacted to this improved outlook. A month ago, markets were pricing in three more rate cuts. Now, as Koukoulas pointed out, “there’s only roughly two” priced in, signalling a change in expectations.
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How Repayments Have Changed in 2025
For mortgage holders, 2025 has brought welcome relief following rate cuts in February, May and August. Monthly repayments on a home loan of $600,000 heading into February this year would have reduced by $272, assuming the bank were to pass on all rate cuts in full.
| Impact of RBA rate cuts on minimum monthly repayments | |||
| Loan size at start of cuts | Monthly Savings after Cut in Aug | Monthly Savings Across all 3 cuts (Feb, May, Aug) | New repayments |
| $500,000 | -$74 | -$226 | $3,091 |
| $600,000 | -$89 | -$272 | $3,709 |
| $750,000 | -$111 | -$340 | $4,636 |
| $1m | -$148 | -$453 | $6,181 |
What Does This Mean for the Property Market?
Despite the economic complexities, the property market has shown remarkable resilience. Previous rate cuts have helped improve affordability and seemingly boosted buyer confidence, according to Cotality’s Monthly Housing Chart Pack.
Over the three months to August 2025, national dwelling values rose by 1.8%, the strongest quarterly rise since early 2024. Annual growth has also picked up, with values up 4.1% over the last twelve months. Regional areas remain particularly robust, outpacing growth in the combined capital cities (6.0% vs 3.6% annually), with Brisbane and Adelaide leading among the capitals.
Such is the strength generally of Australia’s property market, 5 of the 8 capital cities are now sitting at record high dwelling values, on average.
- Sydney, Adelaide, Perth, Brisbane, Darwin are all currently at a record high dwelling values
- Melbourne = -3.0% below record high in March 2022
- Hobart = -10.4% below record high in March 2022
- Canberra = -4.6% below record high in May 2022
On the rental front, the national median rent increased by 4.1% in the past year, and regional rents saw an even higher lift of 5.8%. Despite these gains, gross rental yields have held steady at 3.7% nationally, with regional yields at 4.4%, reflecting a balanced market for both investors and tenants.
What’s Next for Interest Rates?
The RBA has made it clear that it is data-dependent, not preemptive. It will wait to see the actual numbers before making a decision. The next crucial data point will be the September quarter inflation figures, due at the end of October.
Koukoulas predicts that if these numbers confirm that underlying inflation is firmly within the target range, the RBA may deliver another 25-basis-point cut at its Melbourne Cup Day meeting on November 4.
“If they’re showing that the trimmed mean (or underlying inflation) rate is at 0.6 or 0.7%, quarter on quarter, the annual will drop to 2.5%… bang on the target range… they’ll be cautious, but they’ll cut just 0.25% again,” he said.
Bouris agrees, suggesting that a November cut could be the last for a while.
“My view is that there will be no more rate cuts after that one,” he stated.
“The only way we’ll get another rate cut is if something happens internationally that’s going to affect our position in Australia.”
This would signal a return to a more stable interest rate environment, which would be welcome news for households and businesses alike.
Take Control of Your Home Loan
In this shifting environment, it’s more important than ever to ensure your home loan is working for you. A period of stability is the perfect opportunity to review your current rate and features.
Our network of trusted local mortgage brokers is here to help you navigate the market and find a competitive solution tailored to your needs. An experienced broker can help you:
- Confirm your rate. If your lender has not passed on prior cuts in full, ask why and when it will flow through.
- Review your options. There is strong competition in the market, including sharper fixed and variable offers.
- Decide how to use any savings. Keeping repayments the same can help you pay down your loan faster. Directing savings to an offset can help build a buffer without locking funds away.
Whether you’re a first home buyer, looking to refinance, or an investor, we can help you get sorted.
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**The information on this article contains general information and does not take into account your personal objectives, financial situation or needs. If you require further information don’t hesitate to contact the branch directly.
