RBA Rate Cut Unlocks New Property Investment Opportunities

RBA Rate Cut Unlocks New Property Investment Opportunities

Australia’s property market is shifting as the Reserve Bank of Australia drops the cash rate below 4 percent for the first time in two years. Now sitting at 3.85 percent, this move offers welcome relief for mortgage holders and signals increased momentum in the market.

For both investors and homeowners, a 0.25 percent reduction improves cash flow. On a $500,000 interest only loan, dropping from 6.5 percent to 6.25 percent means an annual saving of $1,272 or around $106 each month. Combined with earlier cuts, many are now saving close to $200 per month. These savings may seem small but are driving significant changes across buyer behaviour.

Enquiry levels are rising as buyers who were waiting for relief are now taking action. With borrowing capacity increasing, more people qualify for finance. Historically, those who act during shifting markets build the most wealth. The key is selecting quality growth areas and using smart leverage to benefit from compounding returns.

Need help getting started? Book a consultation. We work with serious investors ready to move.

Disclaimer:

The viewer/listener acknowledges and agrees that:

1. Taylored Property Wealth Pty Ltd is a licensed Buyer’s Agency operating in New South Wales, Australia. It is not a licensed financial adviser, accountant, solicitor, mortgage broker, builder, engineer, architect, town planner, or property manager.
2. The information provided in this episode (or any related media content) is general in nature and does not take into account your personal objectives, financial situation, or needs.
3. This content is provided for educational and informational purposes only and should not be relied upon as professional, financial, legal, accounting, or taxation advice.
4. Taylored Property Wealth strongly recommends that viewers/listeners obtain independent professional advice from qualified legal, financial, taxation, and accounting professionals before making any decisions relating to the purchase or sale of real property or any financial transaction.
5. No warranty, representation, or guara

Chapters

• 0:00 RBA Announces May Rate Cut
• 1:36 Mortgage Repayment Calculations
• 2:49 Market Impact and Rising Competition
• 4:12 Growth Opportunities for Action Takers
• 4:51 Invitation to Property Investors

Transcript

Speaker 0: 0:00

Welcome back to another episode of the Tailored Property Wealth Podcast. My name is Casey Taylor, I'm the host of the podcast and in today's episode we are talking about the rate reduction for May that the RBA has just announced. At the time of recording, this was announced yesterday. So exciting times for mortgage holders as that cash flow is improving, getting a little bit easier with repayments, and today's just going to be a quick video of, I guess, what that looks like in terms of repayments and then a couple of other things that we expect to take place in the marketplace moving forward. So RBA announced a 0.25% rate reduction First time in two years that the cash rate is below 4%, now sitting at the 3.85%. So we're starting to see that trend down right.

Speaker 0: 0:52

Michelle Bullock, she's made a fair bit of commentary about some different factors that are going to kind of influence, moving forward, what's going to take place. My kind of thought process with the rate reduction it wasn't a matter of if we're going to see a rate reduction, it was just a matter of how much. Was it going to be the 0.25% that we saw, or was it going to be 0.5%? So the next meeting is the start of July. Be interesting to see what takes place. Then We'll probably see another rate reduction and it's just not being as bullish as dropping it by that half a percent. So time will tell, we will see. However, there's going to be a couple of things that really start to shift in the marketplace, with more people coming back in Now, just quickly, for repayments.

Speaker 0: 1:36

Now this is off $500,000 worth of debt. If you've got more debt, that savings going to be higher and it does depend upon the interest rate. I have factored this off a 6.5% interest only loan, reducing down to 6.25%, which is just roughly the kind of averages in the marketplace right now. So repayments annually for that 500k debt at 6.5% is $33,132. And it will reduce to $31,860. So it's a saving of $1,272 on an annual basis, or about $106 a month. Not a massive saving, but we did see three months ago a reduction as well. So I guess the average mortgage holder is now saving $200 a month, $50 a week. It definitely does make a difference. It could be shifting some people who were, I guess, neutral with their property from an investment standpoint. It might now be paying a little bit in the pocket. Or there is that reduction of a couple of thousand dollars per year, which is great, right, easy to hold, and then, as we see rates continue to drop, that's going to improve.

Speaker 0: 2:49

And what does that mean for the marketplace? With these improved cash flow positions, the improved and lower repayments, more people are going to enter the marketplace. Some people are sitting on the sidelines waiting to see a couple of rate reductions before they go out and take action again. I had a fair bit of inquiry just yesterday afternoon with that announcement, with people who have been sitting on the fence just waiting and now they're ready to get in and take action and that's just going to be holistically in the marketplace as well. As some people who couldn't borrow, their borrowing capacity might just be starting to increase to where they're in a position where they can buy. So there are going to be more people coming back into the marketplace. You're going to be competing with more people and as the year goes on that's progressively going to lift and we're seeing that in our inquiry levels at the moment with post-election inquiry level came back up and now with the rate reductions it's continuing on.

Speaker 0: 3:45

So if you are in a position where you can borrow money right now and you do not do so, you are missing out on opportunity for capital growth, which is financial freedom for you and your family in the future. Action takers will reap the rewards and then there's unfortunately going to be people who sit on the fence, don't take action and in years to come they're going to complain that property prices are too high and they wish they purchased five years ago. Five years ago we're in COVID. There's negativity in the marketplace, property prices were going to go backwards and what has taken place is in the right locations. Property prices have continued to grow by a lot for some of those locations. So it's a matter of getting the location correctly understanding that and it's going to perform well over the coming years. And then, with that capital growth, you can go out and leverage into more and more property use leverage and the compounding effect to your advantage.

Speaker 0: 4:41

If you're not really sure where to start and you wanna, I guess, work with a professional that really understands this and gets above average results long term reach out to us. Let's have a chat. We can see if we can help you on your property journey to building financial freedom. We have limited spots each month. We don't work with everyone, so it is going to be a matter of seeing if you qualify to be one of the limited clients we work with. Hope. This one's been valuable and we'll see you on the next.