RBA cuts cash rate to 3.85%

The Reserve Bank of Australia (RBA) met on Tuesday the 20th May and the board agreed to decreased the official cash rate by 0.25% p.a., bringing it down to 3.85%. Data on inflation for the March quarter provided further evidence that inflation continues to ease, with it sitting under 3% for the first time since 2021. But what does this mean for you?

Lower mortgage repayments
The big four banks have passed on the cut to interest rates, meaning you should see a decrease to your monthly mortgage repayments. Depending of your loan time, this should help to ease financial pressures and result in savings over the life of your loan.

Increased borrowing power
A decrease in interest rates can often mean that your borrowing capacity improves, as the monthly burden is decreased. This can mean lower repayments, and greater flexibility in buying options - whether this be location, size or giving you access to properties that were previously outside your grasp.

Motivated buyers
As the big banks pass on lowering interest rates, this can result in an influx of buyers entering the market. This leads to greater demand and an increase in competition within the market. Our team suggests that if you are genuinely looking to purchase a new property, that you ensure you have preapproval and are ready to act on a home you love, as others may be in the same situation and looking to act quickly.

What is the cash rate?
This rate serves as the standard to which it costs a bank to borrow money from other banks.

You can read more on the Cash Rate Target via The Reserve Bank of Australia website.