Don't Wait for Rate Cuts - Borrowing Power, Competition and the Real Cost of Delay

But there’s another side to the story that buyers often overlook. Rate reductions don’t only reduce repayments,   they also increase borrowing power. And when everyone’s borrowing capacity jumps at once, it can quickly change the property market you’re buying in.

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How Rate Cuts Boost Borrowing Power

Even a modest reduction in the cash rate can add tens of thousands of dollars to someone’s borrowing capacity.

For example, a 0.25% reduction typically increases borrowing capacity by around 3–5%. That means:

• A household that could borrow $1,000,000 today might suddenly qualify for $1,030,000–$1,050,000.
• At the $500,000 level, that’s an extra $15,000–$25,000 you (and everyone else) can now spend.

Multiply that across thousands of buyers, and suddenly more people are competing in the same price bracket. Auctions heat up, offers get stronger, and sellers raise expectations.

In short, lower interest rates don’t just save you money on your mortgage — they can drive property prices higher.

The Real Repayment Saving vs the Market Impact

On a $500,000 home loan (30-year term, principal & interest):

• At 6.00%, repayments are about $2,998 per month.
• At 5.75% (a 0.25% cut), repayments drop to about $2,917 per month.

That’s a saving of $81 per month or $972 per year.

For the individual borrower, the saving feels helpful. But when thousands of buyers suddenly have an extra $15,000–$25,000 in borrowing power, the overall impact on competition and prices can be far greater than the personal repayment saving.

The Risk of “Waiting for the Perfect Rate”

Many buyers adopt a wait-and-see approach, hoping to purchase once rates come down. On the surface, it feels like a safe strategy.

The reality? By the time rates have actually moved, the market often already has. That townhouse you could buy today for $1,000,000 may cost you $1,100,000 in a year’s time, even if your repayments look slightly cheaper.

Waiting for the perfect conditions often means stepping into a more competitive market, where the same property ends up costing you more.

Focus on What You Can Control

Instead of trying to time the market, consider:

• Affordability now — can you manage the repayments comfortably at current rates?
• The long-term view — will this asset still perform for you over 5–10 years?
• Your readiness — do you have finance pre-approval, so you can act quickly when the right property appears?

Interest rates will always move up and down. What matters most is securing the right property at the right time for you. Waiting for the “perfect rate” could mean missing the opportunity that sets you up for the next decade.

Ready to Take the Next Step?

Thinking about your next purchase? Speak to our team today to map out a strategy that works now and positions you strongly for the future.

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