Unlocking the Rate Cut

In Australia, getting a mortgage can be challenging, especially for self-employed individuals or casual workers. Let's take a look at the case of a couple — one self-employed and the other a casual worker. Their story might resonate with your own situation.

1. What today’s RBA rate cut means for Australians

The Reserve Bank of Australia (RBA) has reduced the cash rate by 25 basis points to 3.6% Reserve Bank of Australia. This move signals confidence in the downward trend of inflation—trimmed mean inflation is now at 2.1%, and headline inflation within the target band Reserve Bank of Australia. For homeowners, particularly those with variable-rate mortgages, this translates into immediate relief via lower monthly repayments.

The Reserve Bank of Australia (RBA) has reduced the cash rate by 25 basis points to 3.6% Reserve Bank of Australia. This move signals confidence in the downward trend of inflation—trimmed mean inflation is now at 2.1%, and headline inflation within the target band Reserve Bank of Australia. For homeowners, particularly those with variable-rate mortgages, this translates into immediate relief via lower monthly repayments.

2. Borrowers hit by the “loyalty tax” stand to benefit

As noted by financial adviser Nicole Hynes, many Australians are unknowingly paying a "loyalty tax"—existing customers being charged interest rates up to 1% higher than new clients, simply due to inertia. A borrower with A$600,000 over 25 years, on a legacy 6.61% variable rate, could save around A$408 per month—and over A$12,000 in two years—if refinancing to a rate like 5.5%, even after switch costs. Now, with the RBA rate falling, the incentive to renegotiate or refinance becomes even stronger.

3. Rentvestor outlook holds firm

Lower rates mean cheaper servicing costs, solidifying the long-term viability of rentvestor approach. As repayments shrink and rental yields remain attractive outside Sydney, his aggressive property accumulation strategy gains renewed momentum.
This not only resolved their immediate financial challenges but also laid a solid foundation for their future investment plans.

4. Impact on NSW property prices: is a growth rebound on the horizon

Lower borrowing costs typically bolster housing demand. With cheaper loans and heightened awareness of rate disparities—thanks to the “loyalty tax” spotlight—more buyers may enter the market, especially in regions like NSW. Coupled with rentvestor activity and greater attention to refinancing, we can reasonably expect gradual support for housing prices. While not an instant boom, the environment now favors a more sustained upward trend in NSW real estate, assuming broader economic stability and steady demand.

Summary

The RBA's rate cut provides immediate breathing room for borrowers, especially those previously caught by higher rates due to loyalty tax. For savvy investors and rentvestors, it reinforces long-term strategies. As borrowing becomes more attractive, NSW housing is poised for a more certain, measured growth trajectory.

If you are considering applying for a loan, contact us for a free consultation, see how we could help you.