Property Finance Update

The Reserve Bank of Australia (RBA) kept the cash rate on hold at its latest meeting, but it looks highly likely the RBA’s next move will be a cash rate cut after President Donald Trump’s sweeping tariffs on US imports sent shock waves through global markets.

Meanwhile, the federal election has been called for 3 May and both major parties have put their housing policy cards on the table.

Property prices are on the rise in almost all capital cities, so if you’re planning an autumn property purchase, talk to us about getting pre-approved on your finance sooner rather than later.

Interest rate news

At its second meeting for 2025, the RBA kept the cash rate on hold at 4.1 per cent.

The latest figures from the Australian Bureau of Statistics showed headline inflation slowed to 2.4 per cent over the 12 months to February – well within the RBA’s target band and down from 2.5 per cent in January. Underlying inflation (as represented by the trimmed mean) was 2.7 per cent, down slightly from 2.8 per cent in January.

However, on 2 April, the Trump administration announced sweeping tariffs on US imports, causing stock markets to plunge and prompting predictions of a US recession and rapid interest rate cuts.

Financial markets have since priced in that an RBA cash rate cut in May is expected, and at least four in total throughout the year. That would bring the RBA’s cash rate down below 3 per cent by the end of the year.

There’s even speculation of a 50 basis point cut – a double rate cut – in May.

With so much interest rate movement on the horizon, it’s crucial to review your home loan early and understand how it compares to others. To explore your options, get in touch today.

Home value movements

Property values across the nation swelled in March, with CoreLogic recording a 0.4% rise in values.

Every capital city except Hobart recorded a positive change. Regional areas also saw prices on the rise (up 0.5% across March).

“Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability,” CoreLogic research director Tim Lawless said.

“With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints.”

Election news and promises

With the election called for 3 May, current and aspiring homeowners will no doubt be eager to hear what the major parties are promising.

The Coalition has vowed to allow first home buyers of newly built homes to deduct part of the interest paid on their mortgage from their income taxes if elected. The scheme would be limited to five years and participants would only be able to claim back the interest paid on the first $650,000 of their home loan, with no limit to the purchase price of the property.

The Coalition also plans to abolish Labor’s $10 billion Housing Australia Future Fund, reduce permanent migration, implement a two-year ban on foreign investors and temporary residents purchasing existing homes, put a cap on foreign students, allocate $5 billion towards infrastructure around housing estates, and allow Australians to access $50,000 out of super to buy their first home (to be returned when the house is sold).

The Coalition has also promised it will get the Australian Prudential Regulatory Authority (APRA) to relax rules for approving home loans, thereby allowing more first home buyers to enter the market. The Coalition will also place a 10-year freeze on changes to the National Construction Code, which sets minimum safety and accessibility standards for buildings, to ease supply constraints and give investors more certainty.

A re-elected Labor government would allow all Australian first home buyers to buy with a 5 per cent deposit, avoiding lenders’ mortgage insurance, in an expansion of an existing scheme. The government will also commit $10 billion to build 100,000 new homes exclusively for first homebuyers, and will introduce a $1,000 instant deduction from 2026-27.

Labor has matched the Coalition’s promise to ban foreign investors and temporary residents from purchasing existing homes for two years. The party also plans to expand its Help to Buy program.

Under the scheme, the federal government provides an equity contribution of up to 40 per cent to support eligible home buyers (around 40,000 Australians) to purchase a home with a lower deposit and a smaller mortgage. Around $800 million will be allocated to lift the property price and income caps (raised from $90,000 to $100,000 for individuals, and from $120,000 to $160,000 for couples and single parents).

Labor will also allocate $54 million towards the prefabricated and modular housing industry to boost home building. The party will continue the rollout of money from its Housing Australia Future Fund, which is designed to support the construction of social and affordable homes over the next five years.

Broad-based cost-of-living measures include new tax cuts, more energy bill relief, and initiatives to cut the cost of medicines and student debt.