Interest rate fears in the dust as buyer optimism surges

Increasing confidence and optimism among buyers could see the traditionally quiet winter months for the property market flipped upside down this year.

Stabilising inflation and lower interest rates are driving improved buyer optimism, with a third of people more confident to buy compared with this time last year.

Findings in the latest Mortgage Choice Home Home Loan Report this week reveal a 20% year-on-year uptick in Aussies feeling confident about their purchase plans.

Three months on from the first cash rate cut in over two years, property seekers are more than likely on the edge of yet another drop, which would bring rates back to levels not seen since May 2023.

By comparison, 64% of respondents last year said interest rates were adversely impacting their confidence.

Financial pressure on households is also easing, the report showed.

Quarterly Consumer Price Index figures from the Australian Bureau of Statistics last month showed that the annual pace of headline inflation is now below the mid-point of the Reserve Bank’s target band.

“The combination of inflation easing and home loan interest rates starting to come down has taken some of the pressure off households,” the report read.

Mortgage Choice also found fewer borrowers are making sacrifices in order to manage their home loan that what they were 12 months ago.

Fewer reported having to cut back on eating out and entertainment, while a lesser amount had to dip into savings.

More than half (60%) of respondents also confirmed they are now putting more money into home loan offset accounts.

Mortgage Choice chief executive Anthony Waldron said it was positive to see most borrowers “aren’t taking a ‘set and forget’ approach to managing their home loan”.

“With home loan interest rates expected to fall further over 2025, I’d encourage borrowers who haven’t reviewed their home loan in more than a year to chat to their broker to ensure they’re still on a competitive rate,” Mr Waldron said. 

REA Group senior economist Anne Flaherty said home prices are expected to recover further this year off the back of the lower interest rate environment, fuelling property market competition.

“While interest rates already predicted to fall in 2025, the anticipated economic fallout from US tariffs has increased market expectations for rate cuts in Australia,” she confirmed.

The Reserve Bank of Australia board will meet next Tuesday for its next decision on the cash rate, with a cut of either 0.25% or 0.5% widely anticipated.

This article first appeared on Mortgage Choice and has been republished with permission.

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