What Lower Inflation Could Mean for Your Home Loan
Inflation is heading in the right direction—and that’s good news for Australian households.
The latest figures from the Australian Bureau of Statistics (ABS) show inflation continues to ease, with February 2025 marking one of the lowest results in more than three years. This shift could help pave the way for future interest rate cuts—welcome relief for borrowers feeling the pinch.
Key Numbers You Should Know
- Underlying inflation (the RBA’s preferred measure) dropped to 2.7%, down from 2.8% in January.
- Headline inflation also fell to 2.4%, its lowest since late 2021.
While this shows progress, experts say inflation might rise slightly later this year as government energy rebates come to an end.
A Turning Point for the Housing Market?
The housing market, which has seen strong price increases in recent years, is starting to settle:
- Rent increases eased to 5.5%—still high, but showing signs of slowing.
- Construction costs for new homes rose just 1.6% over the past year, a big drop from the 22% peak we saw in 2022.
Builders are now offering special deals and incentives to attract buyers, and rental pressures are easing thanks to higher vacancy rates.
What Does This Mean for You?
Although inflation is slowing, the Reserve Bank of Australia (RBA) is unlikely to cut interest rates straight away. A strong job market is keeping the RBA cautious, and most experts now expect the next possible rate cut around July—after the federal election in May.
“This is promising news for anyone with a mortgage or looking to buy. Easing inflation is a step in the right direction, but we’re not out of the woods just yet. That’s why we work closely with our clients to review their rates, plan ahead, and make sure they’re always in the best possible position—no matter where the market moves.”
— Spiro Kolokithas, Mortgage Broker & Managing Director, What If We Finance
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