Rate Cuts in Sight as Inflation Eases, Offering Relief for Mortgage Holders — Sydney Auction Clearance Rate at 69%

Week’s Key Focus

The Reserve Bank of Australia (RBA) is expected to lower the official cash rate to 3.85% this week — marking the first time in over two years it has dipped below 4%. This anticipated rate cut is not only a positive response to easing inflation, but also a tangible relief for mortgage holders burdened by high interest rates.

If implemented, a 0.25 percentage point cut could reduce monthly repayments on a $600,000 mortgage by around $100. Combined with the rate cut already introduced in February, borrowers could see a total monthly saving of up to $200. CBA’s Chief Economist Gareth Aird said inflation has been “tamed” and the Australian economy is undergoing a “soft landing,” creating favourable conditions for monetary policy normalisation.

Recent data shows that homebuyers paid nearly $80 billion in mortgage interest over the past year — a 159% surge compared to the year prior to the RBA’s first hike in 2022. Since the beginning of the rate-hike cycle in 2022, households and investors have spent nearly $290 billion in interest, far exceeding the $157.5 billion paid in the previous three years combined. Although rates remain in “restrictive” territory, the RBA is expected to continue cutting throughout late 2025 and into 2026, offering further relief for borrowers.

Solid employment and wage growth figures also support the case for a rate cut. Australia’s unemployment rate holds steady at 4.1%, with annual wage growth at 3.4% — both in line with the RBA’s forecasts. EY senior economist Paula Gadsby noted that softening inflation and a stable labour market provide the confidence needed for monetary easing. She also cautioned that global trade uncertainty remains, and the RBA must stay alert to how consumers and businesses respond.

On the global front, the 90-day “trade truce” between the US and China has helped calm market tensions, but the US’s effective average tariff rate has reached its highest level in 80 years — sparking concerns about global economic growth and imported inflation risks. However, ANZ analysts called a May rate cut the “least risky path” and predicted further cuts in August, with a new easing cycle likely to begin in early 2025.

With inflation under control and employment remaining stable, Australian households may soon enter a more sustainable phase for homeownership and consumer spending.

Auction Results Last Week

Sydney:667 properties were scheduled for auction, with 440 results reported and 303 sold, resulting in a clearance rate of 69%.The total auction value reached AUD 360,679,550, with a median house price of AUD 1,490,000.
Melbourne:849 properties were scheduled for auction, with 618 results reported and 448 sold, resulting in a clearance rate of 72%.The total auction value reached AUD 336,267,287, with a median house price of AUD 931,250.