Property industry welcomes RBA rate cut as first home buyers struggle

The Real Estate Institute of Australia (REIA) has welcomed the Reserve Bank’s decision to lower the official cash rate to 3.85 per cent, describing it as a timely boost for housing affordability.

REIA President Leanne Pilkington said the rate cut would help address growing challenges for borrowers, particularly first-time buyers.

“The latest ABS Lending Indicators for the March 2025 quarter highlighted ongoing challenges for borrowers, especially first home buyers, in a persistently high interest rate environment, so this is a welcome decision,” Ms Pilkington said.

Recent data from the Australian Bureau of Statistics revealed a 4.2 per cent decline in new first home buyer loan commitments during the March quarter.

“It’s clear the current market settings were making it more difficult for Australians to take that first step onto the property ladder,” she said.

Despite the drop in loan numbers, the total value of new loan commitments increased year-on-year, with investor lending rising by 16 per cent and non-first home buyer lending up 16.3 per cent.

This pattern suggests property values remain resilient despite cautious market sentiment, with many potential buyers delaying purchase decisions amid economic uncertainty.

The data also showed significant activity in refinancing, with a 21 per cent increase in the number of owner-occupiers refinancing externally compared to the previous year.

“Australians are actively seeking better rates and loan terms, with competition among lenders intensifying,” Ms Pilkington said.

The value of refinanced loans grew even more substantially, up 30.2 per cent year-on-year, highlighting the ongoing pressure on household budgets.

Ms Pilkington said the central bank’s decision to ease borrowing costs would have positive flow-on effects for the property market.

“Lower interest rates improve borrowing capacity and will help more Australians, particularly first home buyers, re-enter the market,” she said.

The RBA’s decision marks the second 25 basis point cut for 2025, bringing the cash rate back to the level last seen in May 2023.