Homebuyers busy after rate cut boosted loan levels

Property prices have increased for the second consecutive month after homebuyers took advantage of the modest increase in borrowing power delivered by the February rate cut.

Auctioneer Emanuel Comino brings down the gavel on the sale at Sydney’s Concord last month. Picture: Julian Andrews.

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Property prices have increased for the second consecutive month after homebuyers took advantage of the modest increase in borrowing power delivered by the February rate cut.

National property prices rose a modest 0.27 per cent through March after the first Reserve Bank cut in more than four years put a floor under the housing market and reversed the shallow downturn that emerged at the end of 2024.

Housing researcher PropTrack’s monthly Home Price Index revealed all capital cities recorded price gains, with half hitting a fresh record.

PropTrack senior economist Eleanor Creagh there had been a “clear shift” in market momentum from the cut.

“It’s really likely that sentiment has played a role here in terms of the rebound in prices, given that spending decisions are also governed by sentiment and confidence,” she said.

Money markets are not anticipating the Reserve Bank to slash rates again on Tuesday despite positive signs in the economy, with many anticipating the next cut in May after the federal election.

Home loan brokerage Mortgage Choice has reported a “strong” boost in the number of loans submitted by brokers through February following the cut, with levels in March almost 25 per cent higher year-on-year.

Similarly, Loan Market chief executive David McQueen said the proportion of borrowers with pre-approvals from banks was up 30 per cent in anticipation of the first cut, which added about $12,000 to the borrowing power of the average single person with no dependants earning $90,000 each year.

“Borrowers can now see a ceiling in their repayments and have more confidence in their real estate hunts,” he said.

Financial comparison site Finder’s head of consumer research Graham Cooke said many Australians – homeowners and renters – were looking to “save a buck anywhere they can right now”.

Finder’s head of consumer research Graham Cooke.

PropTrack senior economist Eleanor Creagh.

Recent surveys of more than 1000 people by Finder found four in five (81 per cent) mortgaged Australians planned to either save their rate cuts or budget them towards their loan. Furthermore, three-quarters of voters said the cost of living was at the top of their minds ahead of the election.

Mr Cooke believes most households are holding out for four or five 0.25 per cent rate cuts, the equivalent of about $500 a month.

“After this first cash rate cut, every bank passed on the full cut, 25 basis points” he said.

“What can be interesting if we get a second cut is if banks do that again, or if they start to keep some back.”

PropTrack’s HPI revealed the ACT and Sydney were the strongest property markets in March, rising 0.54 per cent and 0.47 per cent, respectively. Hobart continued to rebound with a rise of 0.38 per cent after recording the largest falls from its record high, while Darwin (up 0.34 per cent) and Melbourne (up 0.20 per cent) also improved. The mid-sized capitals of Adelaide, Perth and Brisbane were the weakest markets in a subversion of trends over the past year despite clocking the biggest annual gains.