Homebuyers poised to pounce on rate cut

Property buyers are using RBA rate cuts as a catalyst to get their finances in order to buy a new home, with new figures showing a surge in pre-approvals on the back of earlier interest reductions.

Mackenzie Scott and James Dowling

James Mashiter and Ashleigh Pullin have been scrambling to find a property through the first-home buyers assistance scheme. Picture: Luis Enrique Ascui

3 min read

8:30PMJuly 06, 2025

Australians are using the Reserve Bank rate cuts as a catalyst to get their finances in order to buy a new home, with new figures showing a surge in pre-approvals on the back of interest reductions earlier this year.

New figures by mortgage brokerage Loan Market have revealed that following the RBA’s February cash rate cut, pre-approvals were 43 per cent higher than in the same period last year. The pattern was repeated after the May cut, with pre-approvals up 53 per cent year on year.

A majority of economists believe a third rate cut for the year is all but confirmed at the RBA meeting’s this week, with another likely 25-basis-point cut to see the cash rate fall to a 3.6 per cent.

Loan Market chief executive David McQueen said cheaper mortgage rates would only entice more people to follow through with their decision to buy. “The cash rate has dropped 0.5 percentage points in the last five months, which has been the news people trying to upgrade or enter the market have been waiting for,” he said.

“Predictions of further rate cuts by the RBA will bring more buyers to the market. The challenge for buyers, at the moment, is the lack of properties for sale.”

Loan Market chief executive David McQueen. Picture: Supplied

Buyers' agent Emily Wallace.

A pre-approval gives buyers confidence they can buy a property up to a certain price point.

The biggest jump in pre-approval activity was in Victoria, which has recorded a 117 per cent uplift following the May rate.

South Australian property searchers were up 60 per cent year on year, compared with 52 per cent in Queensland, 36 per cent in NSW and 9 per cent in Western Australia.

Melbourne-based buyers’ advocate Emily Wallace said many buyers in the market at the moment, particularly those chasing their first home, were trying to get ahead of future price rises.

“Any downwards activity in interest rates with cuts is always directly correlated with an uptick in buyer activity and positivity,” Ms Wallace said.

Open homes are expected to get busier following another expected rate cut in July.

Prospective buyers Ashleigh Pullin, 27, and James Mashiter, 38, were scrambling to find a property through the first-home buyers assistance scheme and had just secured a pre-approval loan.

“Once we hit the market with our pre-approval, there was a rate cut that took place,” Ms Pullin said.

“There were quite a lot of people who seemed to influx the market at the same time as us. Then the property prices started going up another $20,000 than what we’d seen in the last three to four months, and it’s just continued.

“That was prior to the election and we didn’t really know what was going to happen. One party was promising people that they might be able to use their super (to buy). One party was saying they might increase the income limits. Either way, they were going to have an effect that would increase people within the market and that was creating competition.”

Mr Mashiter said they were competing with three kinds of buyers: others on the assistance scheme, downsizers, and first-home buyers independently guaranteed.

Ashleigh Pullin and James Mashiter at their Mitcham rental. Picture: Luis Enrique Ascui

The head of consumer research at financial comparison site Finder, Graham Cooke, said another rate cut would give those with an existing mortgage extra relief after navigating decade-high interest rates over the past two years.

“We’ve seen two cash rate cuts already, but homeowners are champing at the bit for more,” Mr Cooke said.

“The banks will be under a lot of societal pressure to pass on the full rate cut in July.”

Housing researcher Cotality confirmed property price rises had begun to accelerate, moving at nearly twice the rate of wages. Last financial year, purchase prices rose $40,900 nationally.

AMP economist Shane Oliver anticipates a cut on Tuesday despite prices being expected to rise as a result.