New data from the Commonwealth Bank shows how borrowers responded to the August interest-rate cut. Overall, about 11% of eligible home loan customers reduced their monthly mortgage repayments after the cut. The biggest moves came from 31–40-year-olds: 14% of this group lowered their payments (nearly double the rate for under-20s). By contrast, only 7% of over-60s did so. First-home buyers cut at an 8% rate. In dollar terms, these actions save roughly $240 per month on a $500k P&I loan.
CBA’s head of home buying, Marcos Meneguzzi, says this split is driven by life stage: 30s–40s often have young families and need extra relief, whereas older buyers and first-timers have different priorities. CBA economist Belinda Allen adds that household finances are generally recovering – thanks to lower inflation and recent tax cuts – which is supporting stronger spending. In other words, borrowers’ budgets have widened, but so has competition. Borrowing power is improving – but as one analysis warns, waiting too long may mean paying much more later. The smart move is to plan now.
What home buyers should do now
- Mind the competition: Entry-level and family-sized homes are hotly contested, since buyers in their 30s–40s dominate. Expect stiff competition for these properties. A buyer’s agent can map where demand is highest and help you time your purchase.
- Target rising-listing pockets: Look for suburbs where inventory is growing – more stock means more negotiation leverage. (For example, new listings jumped 9.4% nationwide in August.) Areas with rising listings give buyers a better chance to find value.
- Keep deals subject to checks: Always include finance and inspection conditions in any offer. Verify the bank valuation (ensuring it covers your mortgage repayments) and make sure the property is insurable. Our agents handle valuation checks and negotiate on your behalf, so you don’t overlook any risks.
- Plan Using Today’s (or Higher) Interest Rates: In the event of lower rates in the future, it would be smart to prepare the budget at least at the current rate and/or slightly higher. That will protect you if rates go back up or simply do not decrease as rapidly. By using a higher number in the budget, you will know exactly what you can manage with negligible sacrifice.
- Build a Safety Buffer for Living Costs
Living expenses are on the rise. For example, Electricity bills went up about 24.6% last year, while insurance costs rose around 3.0%. Being proactive to stay ahead of living expenses would be to put a little more cash away every month, as these expenses would rise. Pro-active planning will assure you have enough low and fixed expense margin to meet your mortgage and bill obligations on both your ongoing and new rates – and pay down or invest when the rates are lower.
These steps help you use rate cuts to your advantage. If you need guidance, Key2Dreamz’s experts can help. You can freely any call Key2Dreamz at +61 4392 60917 or book a free consultation to get personalised advice on your mortgage repayments and buying strategy before competition heats up.