The Impact of RBA Rate Cuts on Borrowing Capacity and Home Prices

The Reserve Bank of Australia’s recent interest rate cuts are doing more than making headlines. They’re shaping the property market in real and immediate ways. Buyers are noticing, sellers are noticing, and the ripple effects are already being felt across auctions, private sales, and open homes. 

Borrowing Power is Getting a Boost 

When the RBA cut rates in August by 0.25%, Australians on an average full-time income suddenly had around $12,000 more they could borrow. And this isn’t an isolated shift. Over the past six months, borrowing capacity has grown by about $35,000. 

If further cuts roll out as expected, borrowing power could rise by as much as $74,000 in the next 16 months. For many households, that extra flexibility could be the difference between compromising on a property and finally being able to buy the home they’ve been aiming for. 

More Buyers, More Competition 

We’re already seeing the flow-on effects. In the June quarter, Australians signed up for $87.7 billion in new housing loans, which was 2% higher than the previous quarter. First-home buyers were especially active, lifting their borrowing by 5.7%, while upgraders increased their activity by 4.4%. 

In simple terms, more people are stepping into the market with bigger budgets. That translates into fiercer competition at auctions and private sales. Homes are selling faster, offers are getting stronger, and prices are beginning to edge upwards. 

What This Means for You 

If you’re buying, the extra borrowing power is good news, but it comes with more competition. It’s important to stay clear on your budget, know your strategy, and be ready to act quickly when the right home comes along. 

If you’re selling, the conditions are working in your favour. More buyers with more borrowing power often means stronger offers and a greater chance of securing the price you’re hoping for. 

The Bottom Line 

The RBA’s recent cuts aren’t just numbers on a chart. They’re shifting how much buyers can spend, changing the pace of sales, and nudging property prices upward. Whether you’re looking to buy, upgrade, or invest, it’s worth taking a step back to think about how these changes might shape your next move. 

If you would like to book a strategy meeting and see how we can get you into your home faster, please contact our team at Turley Property Advocates.