The Impact of the RBA Holding Rates on Mortgages and the Property Market (April 2025 Update)
Introduction
The Reserve Bank of Australia’s (RBA) decision to hold the official cash rate at 4.35% in April 2025 has triggered widespread discussion across the mortgage and property sectors. With inflation softening and economic growth stabilising, homeowners, investors, and brokers are taking stock of what this means for their financial decisions. At Stellar Finance Group, we’re breaking it down for you.
RBA’s April 2025 Decision: What Happened?
On April 2, 2025, the RBA maintained the cash rate at 4.35%, marking several months of rate stability. RBA Governor Michele Bullock highlighted that while inflation has eased, it remains above target — driven primarily by services and wage pressures. The RBA is walking a fine line between curbing inflation and supporting employment.
Key Economic Drivers Behind the Hold
Inflation: Gradually declining but still outside the 2–3% target band
Wages: Growing modestly, contributing to sticky inflation
Unemployment: Hovering around 4%, with stable participation
Global influence: Slower economic activity in the US, China, and Europe continues to shape Australia’s policy stance
What It Means for the Mortgage Market
1. Mortgage Repayments: Still Tough, But No Worse
Homeowners on variable rates continue to face high monthly repayments. The good news? No increase means repayments won’t climb further — for now.
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2. Refinancing: Now’s the Time to Shop Around
With rates stable and intense lender competition, refinancing has surged. Many banks and lenders are offering cashback incentives and better fixed-rate deals.
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3. Borrowing Power: Small Wins Emerging
Although banks still apply a 3% buffer, the pause in rate hikes has led to slightly improved borrowing capacity. This may help more buyers qualify for loans — especially with lender policy adjustments.
Property Market Reactions
1. Property Prices: Confidence Returns
Holding the cash rate has added confidence to the housing market. We’re seeing improved auction clearance rates and steady demand, especially in metro hubs like Sydney, Melbourne, and Brisbane.
2. Investors: Yield-Hunting Continues
Rental yields remain attractive, especially as rents remain high. Investor interest is returning — especially toward dual-income or high-growth areas.
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3. First Home Buyers: Still Challenging
Despite stable rates, affordability is still tight. Government support like the First Home Guarantee and shared equity schemes can help — but the entry barrier remains high for many.
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Broker & Lender Insights
What We’re Seeing at Stellar Finance Group
We’re fielding more enquiries from:
Borrowers on expiring fixed terms
First home buyers exploring grant eligibility
Investors seeking better serviceability structures
Split loans and interest-only periods are growing in popularity as borrowers hedge their risk.
Industry Analysis: The Adviser’s Outlook
According to The Adviser, brokers report that borrowers are cautiously optimistic. Many believe the cash rate has peaked, and are preparing for potential cuts in 2025–2026.
Looking Ahead: What Could Change?
Will Rates Fall in 2025?
The RBA has left the door open to cut rates if inflation continues to ease. Current forecasts suggest late 2025 or early 2026 for the first cut — but it depends on economic data.
Property Outlook for 2025–2026
Markets are tipped to:
Grow modestly in capital cities
Rebalance in regional areas
Benefit from sustained population growth and low construction
