2025 might bring the long-awaited mortgage rate cuts, with major banks like NAB and Westpac predicting reductions starting in May. Learn what this could mean for house prices, your investments, and financial planning. Prepare for opportunities ahead with insights into Australia's economic outlook.
2025 might be the year that we finally see mortgage rates drop.
In this article, I'm going to share with you the following key takeaways:
If you guys are interested, definitely keep reading.
Now, every year, we have a lot of predictions. We have a lot of forecasts, whether it's economists, people on the street, myself on YouTube, or any other TikTok creator. They might come out and say:
I thought, let's go and address what's happening in the economy right now. Let's lean on some economists and people way smarter than me, and we can then decipher what we need to do in terms of our strategy and what we could actually plan for as well.
What's in store for the Australian economy in 2025?
Here's what to look out for this year.
In a recent article published by Yahoo Finance, it was revealed that:
The report also stated that:
2024 finished with mixed reviews for the Australian economy and markets. There were some excellent
Now, it is believed that interest rates should have been cut a few months ago. I was in the same boat as well. Now we're here, where it's within the target range for the Reserve Bank of Australia (RBA), but I'm not sure that they're at the point to cut yet.
The article also added:
So, let's figure out where we are headed now.
According to economist, Stephen Koukoulas, the author of this article:
I had gone out on my YouTube channel and said time and time again that the RBA will factor unemployment as a really key player. So, the fact that we didn’t see it tick up, which I thought it would towards the back end of 2024, is largely the reason we haven’t seen interest rate cuts.
When we look at what the economists at these banks have been suggesting, that has been a big factor as to why we haven’t moved despite seeing so many economies around the world cutting interest rates.
In addition, it was also revealed that:
Therefore, it's looking like a bit of a mixed bag, where we might have asset prices fall, but we might have a healthier economy, and we might have interest rates start to cut, but they won’t really kick off until 2026.
Now, all of this goes out the window if unemployment goes to crap, and we technically are already in a per capita recession.
However, if we see a slowdown in immigration, we will definitely see those effects.
In a separate report published on Yahoo Finance, Senior Journalist, Stewart Perrie revealed that:
He also stated that a poll conducted among hundreds of Yahoo Finance readers revealed that 23% might be compelled to sell their homes if the Reserve Bank of Australia (RBA) does not implement a rate cut during its first meeting of the year in February.
Now, I will go on to say I don't think that number is going to actually be 23%. Most people would do everything possible before they lose their homes.
I know there are people right now struggling and have been struggling for the last couple of months, but we're almost there.
You might be in a position where you're like: Okay, I need to cut down on the Uber Eats, the alcohol, the cigarettes.
Do all of that. Hold on to what you can because once it goes, and you see interest rates cut, I believe we're going to see the next leg up in pricing.
I don't care what people have to say in terms of: Oh, well, there's a bubble here and there's a bubble there.
At the end of the day, it comes down to who you are speaking to, who is in your circles, and whether you are basing this on your own emotions or data out there. Because data suggests there are a lot of people sitting on the sidelines, cashed up, but just don't have the borrowing capacity.
Therefore, as soon as we see interest rates cut, there's going to be a hell of a lot more demand, and we already know we have a massive supply issue.
Now, when does the CBA, ANZ, NAB, and Westpac think rates will cut?
Journalist, Stewart Perrie said that:
So, how far do the big banks think rates will fall next year?
Now, for each million dollars' worth of debt, if you want to figure out how much of a saving this would make, all you have to do is say $1 million times 1%, and that tells you that 100 basis points will save you $10,000 on average per year, which is huge because that's like 200 bucks every single week.
In this case, if you're going with the prediction of what CBA and Westpac are suggesting, they're saying this year you could probably save an extra $10,000 because the cash rate will drop by 100 basis points.
If you think about it, having an extra $10,000 might mean an extra holiday, but for a lot of people, it might mean that they're able to now service the loan to purchase a third or fourth property.
That is what I'm saying—investors want to buy more. They understand the game.
The inverse can also happen, where the economy could be flourishing and doing really well, but you could see house prices actually drop as well.
I'm of the firm belief that we will definitely see rate cuts this year. How many and how frequently will really depend on other factors, like inflation really coming under control, and to be honest, if you were to zoom out, for someone who holds a lot of debt, I would have loved to see interest rates drop.
However, at the same time, I know that if we drop interest rates by, say, one cut or two cuts and we suddenly see inflation start going up, the most demoralising thing would be to see interest rates hold and then increase after that.
That is what we're trying to avoid here.
We saw a similar thing happen in the 1970s and 1980s in the US economy, where they cut interest rates far too quickly, and we saw inflation pop back up. That is what we're trying to avoid here.
I know that there's some people in pain—even for myself, the cash flow hasn't been looking great. But if you think about the bigger picture, and you're investing properly, you have a strategy, and you have an emergency fund, you should be able to get through this entire period really, really well.
You need to be positioned with strength because if we do see interest rate cuts, then we will see a lot more demand in this market, which is why you need to have the right people on your team.
If you need our help, then you can go ahead and visit Search Property, and book a FREE discovery call with my team. We help everyday Australians like yourself go out there and purchase investment properties without having to be involved in the research, the negotiating, and ensuring it's not a dud investment but in the right location at the right price.
I hope you have learned so much from me in this article!
This is such an exciting time! I won’t say too much just yet, but we’re heading out on a national tour, and I’d love to meet you in your city. Register now to join the waitlist and be among the first to secure tickets when they drop.
Don’t miss out—this chance won’t come around again for another year! We may never run one of these again, but I really want to come out and see you in person.
We're going to:
See you there, and catch you guys up in the next one!
Thanks!
Disclaimer: Search Property Pty Ltd (SP) does not provide financial or investment advice and does not hold a financial services license as defined in the Corporations Act 2001 (Cth). Any advice given by SP is general in nature and does not take into account your personal circumstances or objectives, financial situation or needs.
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