News : RBA Holds Interest Rates

RBA Signals Confidence with Interest Rate Pause

The Reserve Bank of Australia (RBA) has decided to keep interest rates on hold in December for the ninth consecutive meeting. The RBA however has signalled that it could reduce rates as early as February. After its two-day meeting, the RBA maintained the cash rate target at 4.35%, the same level it has been since November 2023.

This decision marks a significant shift in the RBA’s outlook. The December statement revealed greater confidence in the direction of Australia’s economy. This change in tone contrasts with earlier communications, such as in November 2024, when the RBA expressed concerns over inflation risks and emphasized the need to stay “vigilant,” and was “not ruling anything in or out”.

The RBA confirmed that this change in language was deliberate. In a post-meeting press conference, they noted that their increasing confidence stemmed from the alignment of economic forecasts, which have continued to improve over time.

“As each quarter goes by, and our forecasts look like they are basically in line, that gives us a little bit more confidence in the future,” said the RBA.

What Does This Mean for Homeowners and Investors?

Implications for Homeowners

Mortgage Repayments

With the cash rate remaining steady, homeowners can expect their variable mortgage rates to stay stable for the short term. This provides some predictability for household budgets and financial planning.

Time for a Rate Review?

Our conversations with thousands of homeowners each year reveal that 7 out of 10 are not regularly assessing their lender or current loan rates. It’s crucial for homeowners to explore refinancing options, particularly if their current rate is higher than the market average. At the very least, reaching out to their lender to request a rate review could lead to significant savings.

Adjusting interest rates through refinancing could save homeowners between $6,000 and $25,000 annually, depending on the size of their loan. We encourage homeowners to consider these savings and take action to secure more favourable terms.

Implications for Property Investors

Rental Yields

With ongoing constraints on the supply of available properties, this is likely to lead to increased rental demand, ultimately pushing rental yields higher for existing properties.

Investors should monitor their existing rental income and take advantage of these rising market conditions.

Strategic Steps for Investors Before Rate Cuts

With stable interest rates and forecast reductions in the new year, a critical window of opportunity has opened for property investors to enter the market.

Rate cuts typically spark increased competition, driving more buyers into the market. Positioning yourself ahead of this surge provides a strategic advantage, enabling investors to act decisively and capitalise on emerging opportunities.

Conclusion

The RBA’s recent decisions indicate a shift toward a more stable economic environment, presenting promising prospects for both homeowners and investors. Now is the time to review your mortgage rates and refine your investment strategy. With anticipated rate cuts likely to stimulate competition and push property prices higher, acting early will be essential to securing your advantage in a changing market.

Don’t wait for the market to heat up—take action today.

Turn your property goals into reality and secure your competitive advantage. Contact us to define your property portfolio strategy and speak with our experts about positioning yourself for success in 2025.