IN a move set to provide some relief to mortgage holders, the Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points, bringing it down from 4.35 percent to 4.1 percent.

This marks the first reduction in the cash rate in more than four years and follows a prolonged period of interest rate hikes that placed significant pressure on Australian households.

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The cash rate had been on a downward trajectory since 2011, reaching its lowest level of 0.1 percent in November 2020.

However, in May 2022, the RBA initiated a series of increases, raising the rate by 25 basis points – the first rise in eleven years.

Over the next 18 months, the RBA implemented 12 additional rate hikes, peaking at 4.35 percent in November 2023.

The rate remained at this level until the February 2025 meeting, where the board opted for a cut.

The decision has been welcomed by many, with Australia’s big four banks expected to pass on the full reduction to customers with variable-rate loans.

However, financial analysts caution that while the cut provides some relief, it is unlikely to significantly alter household spending patterns, particularly for those already struggling under the weight of previous increases.

The property market is expected to react to the change, with both buyers and sellers watching closely.

Interest rates have been a major concern in the real estate sector, influencing affordability and borrowing capacity.

“There has been a lot of anticipation and conversation in the region about the RBA’s predicted moves,” said local real estate agent Mark Whatson from Professionals Laurieton.

“There is no doubt many people are breathing a sigh of relief at this news, but we will still need to proceed with caution.”

Despite the rate cut, the RBA remains focused on controlling inflation, meaning there is no guarantee that further reductions will follow in the short term.

Economists predict that sustained cuts will be required before the market fully adjusts to changing conditions.

For now, homeowners and businesses will be monitoring the situation closely, hopeful that this marks the beginning of more accessible lending conditions in the months ahead.

By Luke HADFIELD