The Rate Cut That Changed the Game

Australia has waited over three years for this moment: the Reserve Bank of Australia has finally cut interest rates.

On the surface, a 0.25% drop may seem modest. But for property owners, investors, and aspiring buyers alike, this small percentage could represent a massive shift in opportunity. For some, it will mean hundreds in monthly savings. For others, tens of thousands in extra borrowing capacity. For everyone? A change in sentiment that might just mark the beginning of the next property upswing.

So what does it all mean—and what should you do about it? 

Let’s break it down. Watch the full. episode here.

📉 The First Rate Cut Since November 2020

The Reserve Bank’s February 2025 announcement marks its first interest rate cut since the height of the pandemic. With inflation easing to 3.2%, and household spending clearly curbed, this decision was both expected and urgently needed.

Cost of living and housing affordability are top-of-mind issues for Australians. With a federal election on the horizon, it was widely speculated that the government needed a financial win for households. This rate cut provided it.

And while the move has already stirred excitement among mortgage holders, it has broader implications for both market sentiment and strategy.

💲 How Much Will You Save On Your Mortgage?

This is the question on every mortgage holder’s lips. The good news: real savings are on the table. Here’s how much monthly repayments could drop, based on your loan size:

  • $600,000 mortgage: approx. $92/month
  • $750,000 mortgage: approx. $115/month
  • $1 million mortgage: approx. $154/month

Sure, it’s not enough to fund a luxury holiday. But in an environment of grocery inflation and budget tightening, it’s meaningful relief—especially for families doing it tough.

Important Tip: Not all banks automatically reduce your repayments. Some will keep your repayments unchanged, simply shortening your loan term. If you need that cash flow, contact your lender or broker ASAP to:

  1. Confirm your rate cut was passed on
  2. Adjust your repayment schedule accordingly

At Atelier Wealth, this is already in motion for our clients.

🧮 Why Sentiment is Everything Right Now

Confidence is often the true catalyst for property growth.

In the lead-up to this rate cut, our team saw a major uptick in buyer activity. Clients reached out, reactivated strategies, and in many cases moved quickly to buy ahead of the cut.

This reflects a broader truth: Australians are no longer in wait-and-see mode. The moment the RBA hinted at easing, the market stirred. With further cuts forecasted (some major banks are tipping up to four more in 2025), the broader mood is shifting from cautious to confident.

And that confidence? It’s contagious—and competitive.

🌐 What It Means For Borrowing Power

This 0.25% rate cut isn’t just about saving money—it boosts what lenders will allow you to borrow. Let’s look at the numbers:

  • Single applicant on $100K income: +$15,000 in borrowing power
  • Couple on $200K combined: +$20,000 to $25,000 boost
  • 1% rate cut (4 cuts over the year): +$60,000 (single), +$120,000 (couple)

The math is simple: every 1% drop in interest rates gives back around half your income in borrowing capacity.

This is game-changing for:

  • First-home buyers trying to break into the market
  • Upgraders seeking more space
  • Investors looking to expand portfolios

But here’s the kicker: property prices are likely to outpace these borrowing boosts.

📈 CoreLogic Data: Property Prices Are Set To Rise

In fact, CoreLogic’s recent insights predict some areas could see price increases of up to 19% from a 1% rate cut.

So while your borrowing may rise by $50K or $100K, property prices might jump by even more.

What does this mean in real terms?

If you’re waiting for affordability to improve, you’re running uphill. Waiting won’t help you save fast enough to match rising values. And once investor and FHB demand heat up (as it already is), you’ll be competing in a tighter, faster-moving market.

🔐 Why HECS Debt Is the Silent Killer of Borrowing Power

Beyond interest rates, one of the biggest levers affecting borrowing power is HECS debt.

  • A $70K income with HECS: -$18K in borrowing capacity
  • A $100K income: Up to -$30K

With mounting public pressure, the government is considering removing HECS from borrowing assessments. If they do? Expect a massive flood of FHBs into the market.

That makes now an ideal window to act before policy changes push demand (and prices) even higher.

❌ Don’t Ignore Credit Cards Either

Credit cards are another silent killer. Even unused, a $10,000 limit can reduce borrowing capacity by tens of thousands. And interest rates on credit cards don’t fall with the RBA.

Our advice:

  • Cancel unused credit cards
  • Avoid interest-bearing accounts
  • Streamline your liabilities to unlock maximum borrowing power

🏡 First Home Buyers: Your Moment Is Here

With a rate cut, rising sentiment, and potential HECS and super policies in the works, first-home buyers are uniquely positioned to make moves.

But here’s the caveat: you won’t be the only one.

When the government announces schemes or changes like:

  • HECS exclusion from assessments
  • Super withdrawals for deposits
  • Expanded First Home Buyer Guarantees

…prices surge almost overnight. We saw it with past grants, and we’ll see it again.

So if you’re in a position to buy now—do it before the crowd arrives.

🏞️ Regional Markets Are Quietly Booming

Forget the Sydney-Melbourne headlines. Here’s what the CoreLogic February 2025 Chart Pack shows:

  • 75% of regional suburbs saw quarterly price increases
  • 50% of capital city suburbs saw declines
  • 90% of Melbourne suburbs declined in value

Regional NSW areas like Newcastle, Shoalhaven, the South Coast and Central Coast are seeing strong demand from buyers chasing lifestyle, space, and affordability.

And with more families questioning inner-city livability (think traffic, density, development), expect this trend to continue.

🎓 Policy, Politics, and the Supply Shortfall

Let’s not forget one of the biggest elephants in the room: supply.

The Federal Government pledged to build 1.2 million new homes by 2030. But we’re not on track. Current projections fall short by at least 200,000 dwellings.

When you:

  • Decrease rates (increasing demand)
  • Add incentives (super, HECS, guarantees)
  • Fail to build enough supply…

…you get one outcome: prices rise.

⚡ The Rise of Creative Strategies

With changing lending conditions, we’re seeing a rise in smart, creative strategies:

  • First-home buyers relocating interstate to meet policy criteria
  • Investors using trusts and SMSFs for tax and borrowing advantages
  • Couples leveraging equity in PPORs to build multi-property portfolios
  • Rentvestors turning temporary homes into cash-flowing assets

We’re also seeing a surge in interest around commercial property in 2025, with many seasoned investors diversifying from residential.

The bottom line? There are options—you just need the right advice.

✉️ Roadmap or Review: Let’s Talk Strategy

There are two paths we see clients taking:

  1. The Roadmap Session
    • You’re early in your journey
    • You need help defining your buying strategy
    • You want to understand your options
  2. The Portfolio Review
    • You own 1+ properties
    • You’re ready to scale but unsure how
    • You want a smarter lending structure

In either case, we’re here to help. DM us or book a session to map your next move.

📆 Introducing Our Investor Community

Lastly, we’re launching a brand-new investor network (formerly Property Powerhouse – new name pending!).

This isn’t a passive Facebook group. It’s a place to:

  • Set goals and be held accountable
  • Celebrate wins (even the silent ones)
  • Share lessons, referrals and insights
  • Surround yourself with people who think bigger

If you’re planning to buy your first or fifth property this year, we want you in.

DM us “community” and we’ll send you the invite.

Are You Ready to Act?

2025 has kicked off with a bang. The RBA rate cut is the first domino in what could be a major shift in the market.

You can:

  • Sit back and wait
  • Hope for the perfect moment
  • Or… get proactive, get strategic, and get moving

Because the market is moving, whether you’re in or not.

If you’re ready to:

  • Buy your first home
  • Invest smarter
  • Scale your portfolio

Let’s talk.

Book your Atelier Wealth strategy call today. Let’s build a plan that puts you in the driver’s seat for 2025 and beyond.