RBA cuts rates + Houses vs units + Broker market share keeps rising
The Reserve Bank of Australia (RBA) has cut the cash rate by 0.25 percentage points to 4.10% – its first rate reduction since November 2020 – offering some relief to mortgage holders.
The board said inflation had “fallen substantially” from its 2022 peak, with underlying inflation easing to 3.2% in the December quarter. Slower private demand and moderating wage pressures gave the RBA confidence inflation was tracking towards its 2-3% target.
But despite the rate cut, the RBA warned it isn’t necessarily the start of a broader easing cycle.
“Monetary policy has been restrictive and will remain so after this reduction in the cash rate,” it said in the post-meeting statement. The board highlighted lingering risks, including stronger-than-expected labour market data, which could slow inflation’s decline.
With global economic uncertainty and inflation still a concern, the RBA said future rate moves would depend on incoming data.
So, for now, borrowers get some relief, but the path ahead remains uncertain.
Units offer first home buyers a faster path to ownership
First home buyers looking for the fastest way into the market may want to consider a unit, with new Domain research finding it takes, on average, 20 months less to save for a unit deposit than a house.
Domain’s latest First Home Buyer report revealed that a typical 24–35 year-old couple, on average wages, now takes 3 years, 5 months to save a 20% deposit for an entry-priced unit across the combined capitals, compared to 5 years, 1 month for a house.
The gap is even wider in Sydney (2 years, 5 months faster) and Canberra (2 years, 4 months faster).
Brisbane, Adelaide and Perth were the only cities where saving times increased for both houses and units due to strong price growth outpacing wage growth.
Melbourne, on the other hand, was the only city where saving times for both property types have fallen over five years.
Domain chief of research and economics Dr Nicola Powell said affordability is worsening.
“In the past five years, entry house prices have increased 58%, while unit prices have risen by 27%. Meanwhile, inflation surged 20% and wages only grew by 15%” she said.
“This shows the growing gap between earnings and property costs, making it harder for first home buyers to get into the market.”
Brokers now handling 76% of new home loans
Mortgage brokers are more popular than ever, settling 76.0% of all new home loans in the December 2024 quarter, according to data from research group Comparator.
That’s up from 71.8% a year earlier and 6.7% higher than December 2022.
Brokers also facilitated $115.06 billion in new home loans – a 22% increase on the December 2023 quarter.
Mortgage and Finance Association of Australia |(MFAA) chief executive Anja Pannek said the surge reflected borrowers seeking expert guidance amid economic uncertainty and high interest rates.
“Brokers also assist clients to understand their financial position and get ‘finance ready’, prepare for lending approval, and navigate government schemes to achieve the goal of buying their first home. The breadth of assistance brokers offer is significant and valuable.”
More choice, better outcomes – that’s why brokers continue to dominate the home loan market.