Interest Rates: Is Now a Good Time to Fix Your Loan?
The Reserve Bank of Australia (RBA) has recently shifted its monetary policy, offering some relief to borrowers. After 13 consecutive interest rate increases between May 2022 and late 2024, aimed at tackling high inflation, the RBA has now started to cut rates. In February 2025, the cash rate was reduced to 4.10%, followed by another cut in May 2025, bringing it down to 3.85% — the first time in nearly two years that the rate has dropped below 4%.
What Does This Mean for the Property Market?
Lower interest rates generally boost buyer confidence and borrowing power, and we’re already seeing signs of renewed activity in the housing market. Analysts are forecasting national home price growth of around 4% in 2025, with stronger gains in cities like Brisbane, Perth, and Adelaide, where growth could reach 5%.
On the flip side, lower rates can also drive up demand, putting upward pressure on property prices. This may make it more competitive for first-home buyers, as more people look to re-enter the market or upgrade their homes.
Should You Fix Your Home Loan Rate Now?
Fixing your home loan rate can give you certainty and protect you from future rate hikes, but it’s important to weigh the pros and cons.
Benefits of fixing your rate:
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Certainty around your repayments, making it easier to budget.
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Protection if rates start rising again.
Things to consider:
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You might miss out on savings if rates continue to fall.
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Fixed loans can be less flexible — there are often limits on extra repayments, and break fees may apply if you want to end the loan early.