The Reserve Bank of Australia (RBA) has opted to maintain the official cash rate at 4.1%, signaling a wait-and-see approach in a period of economic uncertainty.
This move, while anticipated, raises questions for borrowers navigating the current financial landscape, particularly with student debt affecting many Australians.
MPA Magazine has explored how this decision might influence market dynamics, with key insights on refinancing and borrowing strategies. Homebuyers and those with existing loans will need to stay informed about potential shifts in the coming months to make well-timed financial decisions.
RBA’s Current Economic Outlook and Decision
The RBA’s recent decision to hold the cash rate steady follows a cautious economic outlook. The central bank noted that
Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress.
However, it also highlighted ongoing challenges, stating,
Businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices
Despite these concerns, the RBA’s priority remains clear :
Sustainably returning inflation to target is the priority.
Advice for Homebuyers and Borrowers
Despite the RBA’s rate hold, Anthony Waldron, CEO of Mortgage Choice, reassures prospective homeowners not to be discouraged by the decision.
If you are in the market for a property, don’t be discouraged by the RBA’s decision to keep the cash rate on hold this month,
Waldron said, emphasizing that the rate is expected to decrease further throughout 2025, which could increase borrowing capacity. However, he also warned that
It will also increase competition from other buyers, which is why it’s important to get advice from a broker so you’re prepared when you find the right property.
Waldron further stressed the importance of brokers in helping borrowers navigate the current market.
Your broker can quickly compare your current loan against what’s in the market and help you find the right loan for your needs – he added.
The Rise of Refinancing and Broker Support
Since the February rate cut, there has been a notable increase in refinancing activity. Mortgage Choice reports a rise in loan submissions for refinancing, with the proportion of applications focused on refinancing rising month on month.
We saw an uptick in the number of borrowers looking to refinance over March, with the proportion of Mortgage Choice loan submissions for refinance rising month on month – said Waldron.
Brokers are playing a critical role in helping borrowers find better rates, making it essential for borrowers to consult them to secure competitive deals.
Non-Bank Lenders and Market Shifts
The surge in refinancing has also extended to non-bank lenders, with institutions like Assetline and Bluestone Home Loans seeing increased interest in their alternative mortgage products. Royden D’Vaz, General Manager of Assetline, noted that their 30-year long-term mortgages saw an uptick in demand.
With the general election nearing, we are not overly surprised that the RBA rate has remained – D’Vaz commented.
He added,
In February, Assetline was delighted to reflect the RBA rate decrease to our borrowers and since then we have seen an increase in scenario submissions across the country, especially with our 30-year long-term mortgages.
D’Vaz also encouraged brokers to
Shop around to find the best solution to suit their customers,
despite the RBA’s rate hold.
Bluestone Home Loans has also seen a significant shift, with Mark Jones, CEO, commenting on the impact of the February rate cut:
We’ve seen a return to confidence to homebuyers after the February interest rate reduction – He also pointed out that
Further rate reductions are appropriate through the remainder of 2025, reflecting increased global uncertainty and continued improvement in inflation in Australia – He added,
Given the RBA did not move at this meeting, we believe a rate reduction is warranted and likely in May.
