Melbourne homeowners in 300 suburbs could save hundreds if interest rates drop | PropTrack

Mortgagees could save anywhere up to $600 a month if interest rates are cut following the Reserve Bank of Australia’s first meeting later in February. SEE HOW.

Sarah Petty

4 min read

February 8, 2025 - 5:01AM

Monthly mortgage repayments could be slashed by hundreds if a rate cut occurs this month. <a href="https://www.realestate.com.au/property-house-vic-st+leonards-147139636">46 Duchess Dr, St Leonards </a>is up for sale for $729,000-$$759,000.

Monthly mortgage repayments could be slashed by hundreds if a rate cut occurs this month. 46 Duchess Dr, St Leonards is up for sale for $729,000-$$759,000.

Melbourne families in more than 300 suburbs could be set to get $100 a month back into their budgets after a single interest rate cut announcement that could just 10 days away.

New PropTrack research shows monthly mortgage repayments could be slashed by anywhere from $30 to $590 a month based on typical house and unit prices across more than 600 suburbs and towns in Victoria.

This would put anywhere from $360-$7000 back into families’ pockets in the next year.

Homeowners’ hopes for relief hang on February 18, when the Reserve Bank of Australia (RBA) meets for the first time this year.

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And the chances of a cut got a boost recently after the Australian Bureau of Statistics released data showing inflation has reached its lowest level in three years.

The nation’s cash rate, which underpins interest rates on home loans, is currently at 4.35 per cent — the highest level since December, 2011.

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5 London Bridge Rd, Portsea is listed for sale for $3.8m-$4.18m.

The median house price for a Portsea property is $3.68m with monthly mortgage repayments of $18,130.

PropTrack’s modelling shows that if there are two rate cuts at 0.25 percentage points, homeowners around the state could be saving anywhere from $60-$1180 in a month.

As much as $1790 could be shaved off loan commitments each month if there are three rate cuts.

REA Group economics executive manager Angus Moore said housing affordability had rapidly and significantly deteriorated as interest rates rose substantially from May 2022 to November 2023.

“That’s obviously been a handbrake for many people and has also been a bit of a headwind for home prices,” Mr Moore said.

“As we head into this year, we are expecting we’re going to see a number of rate cuts, potentially as early as February.

“That’s going to start to improve housing affordability and be a bit of a tailwind for home prices.”

150 Lloyd St, Dimboola is listed for $269,000.

The median house price in Dimboola is $260,000 with current monthly mortgage repayments of $1280.

He added that a number of homeowners had refinanced their loans in response, especially those who purchased when interest rates were low.

“The driver of that refinancing activity was the roll off from fixed-rate loans,” he said.

Homeowners in Melbourne’s most affluent suburbs like Toorak, East Melbourne and Portsea will experience the biggest savings if rates were to be cut.

Meanwhile regional residents in Dimboola, Victoria’s north west, where the median house price is $260,000 will save just $30 a month from one cut.

Cinch Loans managing director Arnab Baral said in the past four weeks many of his clients had sought to refinance their mortgages as banks began offering attractive fixed rates.

Mr Baral said even property investors were happy to fix their mortgages for 12 months because of competitive interest rates, with Macquarie Bank offering 5.69 per cent for one year.

The Moneysmart.gov.au website currently has the average principal and interest rate in Australia at 6.15 per cent.

“(Investors) are basically holding off selling properties in Victoria if they have investment properties,” he said.

“They personally feel that it’s better to carry on with the rent rather than selling because it will probably not provide them with the kind of profit that they’re looking for.”

6 Boston St, Fawkner is listed with a price guide of $770,000-$840,000.

The median house price in Fawkner is $770,000 with monthly mortgage repayments of $3800.

PropTrack research shows Melbourne property prices are down 3.39 per cent in the 12 months to January, with the median home price falling from $806,000 to $779,000.

Mr Baral said property prices would likely rise once there was a rate cut, providing some relief to those who were looking to sell their investments.

Prominent buyer’s advocate Cate Bakos said consecutive interest rate cuts had diminished homebuyer energy quickly.

“For long periods, we lost a lot of investors,” Ms Bakos said.

But she said since talk of an interest-rate cut had spread, more prospective property buyers, including investors, had returned to the market.

“Now that there’s definite confidence that 2025 will be the year that we get a (rate) cut, we’ve got owner occupiers flooding back in hoping to avoid the rush,” she said.