The Reserve Bank of Australia (RBA) recently made a significant move by cutting the cash rate by 25 basis points to 4.10 percent, marking the first easing in over four years. This shift signals the beginning of a new phase in the interest rate cycle, one that many investors have been waiting for. But what does this actually mean for those looking to start or expand their property investment journey?

Lower borrowing costs and improved cash flow

One of the most immediate effects of the rate cut is cheaper finance. With lenders passing on the reduction, mortgage rates have started to fall, easing repayment pressures for investors. While the savings per month may seem modest, these reductions improve cash flow, making it easier to manage existing investments or consider new purchases.

Lower rates also reduce financing costs for landlords, which can boost rental yield and make investment properties more sustainable. For those who have been stretched by high interest rates, this shift could mean renewed opportunities to expand their portfolio with greater financial confidence.

Boost to borrowing capacity and affordability

Beyond monthly savings, a key impact of the rate cut is an increase in borrowing capacity. With serviceability assessments easing slightly, investors who were previously constrained by lending limits may now find they qualify for higher loan amounts.

Senior economist at REA Group, Eleanor Creagh, has noted that both buyer confidence and borrowing capacity will be boosted as rates begin to fall. This means more investors will have the ability to enter the market or upgrade their portfolios, something that has been challenging in the higher-rate environment.

However, it is important to acknowledge that while borrowing power is improving, overall housing affordability remains stretched. Investors should still approach with caution and ensure their strategy aligns with their long-term financial goals.

Market sentiment and investor confidence on the rise

Perhaps the biggest shift following the rate cut is the psychological impact on the market. After years of tightening monetary policy, investors are seeing a shift toward a more favorable lending environment.

CoreLogic research has shown that expectations of lower interest rates directly influence buyer sentiment, leading to increased enquiries and stronger demand. Property analysts have already reported a noticeable uptick in investor activity, with many now reassessing their borrowing capacity and property investment strategies.

Dr Nicola Powell, chief of research and economics at Domain, has pointed out that some investors were already making moves ahead of the RBA’s decision. Now that rate cuts have officially begun, many of those who were sitting on the sidelines may take this as the green light to re-enter the market before competition intensifies.

Should investors act now or wait?

With rates starting to decline, investors face a strategic decision – buy now or wait for further cuts?

Some are choosing to act early, knowing that as sentiment improves, competition will increase, making it harder to secure prime investment properties. Historically, the start of a rate-cutting cycle has often led to increased buyer activity, which can push prices up over time.

On the other hand, some may choose to wait for additional rate reductions before committing to a purchase. However, economists warn that waiting too long could result in missed opportunities, particularly if demand surges and property values start to rise again.

Dr Powell explains that when cash rates fall, housing market turnover increases and competition for properties strengthens, which means those who enter the market earlier may benefit from more negotiating power.

What experts and financial analysts are saying

Leading property data firms and financial institutions have shared insights on what this rate cut means for investors:

• CoreLogic expects the cut to provide some relief for borrowers, boosting confidence while stabilising property values. While they do not expect an immediate property boom, history suggests that easing interest rates often support market growth.
• Domain has reported that investors were already active before the cut, with
  many increasing their activity now that financing conditions have improved.
• Major banks predict that more cuts may be on the horizon, with ANZ, CBA, NAB, and Westpac forecasting further reductions throughout 2025. However, they caution that the easing cycle will likely be gradual rather than aggressive, meaning investors should plan for slow but steady improvements in borrowing conditions.

Looking ahead – how should investors approach the market?

For those looking to invest, this rate cut provides a stronger foundation to make informed decisions. It offers:

• lower borrowing costs, improving cash flow and making investments more sustainable
• increased borrowing power, creating more opportunities for portfolio growth
• a market sentiment shift, with rising confidence likely leading to increased competition in the coming months

While the 25 basis point cut is a step in the right direction, experts recommend that investors remain strategic. Lower rates alone should not drive investment decisions – instead, buyers should focus on property fundamentals, rental yields, and long-term market trends.

As the interest rate cycle begins to turn, investors who position themselves early may be able to secure better deals before demand picks up. However, those who wait too long could find themselves facing a more competitive market as conditions improve.

The key takeaway? Be prepared, do your research, and act when the timing aligns with your investment goals.

Sources: CoreLogic, Domain, REA Group, Reserve Bank of Australia, major Australian banks, and financial analysts.

For further insights on property investment, avoiding common pitfalls and staying informed about market conditions. reach out to John Tsoulos or Frank Pennis at IFP Advisory on (08) 8423 6176. Your investment success depends on making informed, strategic decisions.

IFP Advisory is an Accredited ASPIRE Property Advisor Network advisor and all professionals are Qualified Property Investment Advisors (QPIA). Property investing is about purchasing a property that aligns with your goals and investment strategy. You should never be sold an investment. Know your numbers! If you invest wisely and strategically, the Australian residential property market can be a rewarding venture.