interest rates Archives - Sanford Finance

RBA Cuts Rates for the First Time in Two Years: What It Means for Your Finances

May 21, 2025 | Interest rates, Investment Property, Property Market

The Wait Is Finally Over

After years of rising interest rates that have tested Australian households and businesses, the Reserve Bank of Australia (RBA) has finally delivered some welcome relief. In its May meeting, the RBA cut the official cash rate by 25 basis points to 3.85% – the first reduction in over two years.

This significant shift in monetary policy marks a turning point for borrowers across the country. But what does it mean for your finances, especially if you’re self-employed or running a small business? Let’s break it down.

Why Now? The Economic Picture

The RBA’s decision reflects growing confidence that inflation is finally under control. Recent data shows that core inflation has returned to the RBA’s target range of 2-3%, sitting at 2.9%. This crucial development has allowed the central bank to shift focus from fighting inflation to supporting economic growth.

Despite global uncertainties – including recent U.S. credit rating downgrades and ongoing trade tensions – Australia’s economy remains resilient:

Unemployment is steady at 4.1%
The labour market participation rate is strong at 67.1%
Economic growth has slowed but remains positive

What This Means for Homeowners

If you’re currently paying off a mortgage, this rate cut could deliver meaningful savings:

On a $500,000 loan, you could save approximately $76 per month (assuming lenders pass on the full cut)
On a $1 million loan, potential monthly savings increase to about $152

For those who have been struggling with higher repayments over the past two years, this represents the first real relief in a challenging period. While one rate cut won’t completely offset previous increases, it signals a potential change in direction that could lead to further cuts later this year.

Self-Employed Australians: Your Opportunity Window

If you’re self-employed or running a small business, this rate cut opens several strategic opportunities:

1. Business Expansion

Lower interest rates make business loans more affordable, potentially enabling expansion plans that may have been on hold during the higher rate environment.

2. Equipment and Vehicle Finance

If you’ve been delaying purchases of new equipment, vehicles, or other business assets, now could be an ideal time to reassess. With improved borrowing conditions, asset finance options become more attractive.

3. Refinancing Existing Debt

Many self-employed Australians have been carrying higher-interest debt through the rate hiking cycle. The new environment creates favourable conditions for consolidating or refinancing this debt.

Looking Ahead: Will Rates Fall Further?

While the RBA has made its first move, economists remain divided on the pace of future cuts. Our analysis suggests:

The next rate cut could come as soon as August, depending on inflation data
A more conservative scenario would see another cut in November
By mid-2026, we could see the cash rate settling between 3.0-3.5%

The RBA has made it clear that future decisions will depend on economic data, particularly inflation figures and employment statistics.

How Sanford Finance Can Help

As specialists in lending solutions for self-employed Australians and small business owners, we’re uniquely positioned to help you navigate this changing interest rate environment:

Home Loan Review: Let us assess your current mortgage and identify potential savings through refinancing
Business Lending Solutions: Access our network of over 40 lenders who understand the unique needs of self-employed professionals
Asset Finance: Explore competitive rates on equipment, vehicle, and other asset purchases
Strategic Planning: Develop a financing strategy that takes advantage of the current rate environment

Take Action Now

The rate cut environment won’t last forever, and taking action now could secure you significant savings over the life of your loans.

Contact our team today for a no-obligation review of your financial position. We’ll provide clear, straightforward advice on how to make the most of this shifting rate environment.

Sanford Finance – Smart Lending for Self-Starters

Disclaimer: This information is general in nature and does not take into account your personal financial situation. It is provided for educational purposes and should not be considered financial advice. Please consult with a financial professional before making any financial decisions.

How will the 2024/25 Federal Budget Impact the Property Market?

Jun 3, 2024 | Government Grants, Property Market

Easier to read and understand, our 2024-25 Federal Budget Summary wraps up the key changes and introductions that are likely to impact the property market.

Growth Expected

Economic growth is forecast at 2% next year and 2.25% in 2025-26

Inflation to Fall

The treasury expects inflation to fall to 2.75% by June 2025 (a more optimistic view than what the RBA has forecast).

Employment to Slow

Employment growth is forecast to slow from 2.25% this year to 0.75% in 2024-25, with unemployment rising to 4.5%.

Increased Borrowing Power

Boosts from Tax Cuts

Homebuyers will be able to borrow tens of thousands more next financial year due to tax cuts aimed at lowering the cost of living.

Higher Take-Home Pay

Adjustments to tax rates will increase most taxpayer’s take home, enhancing their ability to borrow for a home.

Auction Advantage

This increase in savings could make a significant difference during home purchases, potentially being the deciding factor in competitive bids.

Advantage for Dual Income Homes and First Home Buyers

Households with dual incomes will see a more substantial impact, potentially doubling the borrowing capacity increase.

Higher interest rates have constrained borrowing capacities for first-home buyers in the past, making the tax cuts particularly beneficial. Those buying affordable properties will benefit the most from the increased borrowing capacity.

Tax Cut Timing

Banks may take a month or so to update their calculators to reflect tax cuts, but brokers can manually adjust calculations sooner – allowing home buyers to take advantage of their additional take home pay sooner.

How will the 24-25 Federal Budget impact your property goals?

Wondering how this will impact your property goals? Whether you’re looking to buy, sell or invest, our team is here to help. Get in touch today to see how we can help make your property goals a reality.

Evaluating the property market in Australia: Is now the time to buy or sell?

Jun 1, 2023 | Property Market

The decision to buy or sell property is always a tricky one, as it’s a significant financial step that involves careful consideration of various factors – including market conditions.

Whilst it’s important to know that real estate markets can be unpredictable, understanding the key indicators can help you to make an informed decision. So, let’s look at the factors influencing the Australian property market.

Low Listing Numbers = Increased Competition for Buyers

With decade-low listing numbers, there’s not a lot of competition in the market for vendors – but competition is fierce for buyers as they battle it out to secure a property. This is one of the reasons that selling conditions have strengthened, as evidenced by above average clearance rates, faster selling time and less negotiation.

The total number of homes listed for sale across Australia is currently 28% below usual (as reported by CoreLogic). When these volumes are low, selling conditions strengthen, meaning that potential vendors thinking about selling may jump in now rather than waiting until the traditional spring period where activity surges and there’s a spike in competition.

Rising Prices

Home values for Sydney, Melbourne, Brisbane and Perth all recorded an increase in housing values from the lows recorded in February. A mid-month update based on CoreLogic Australia’s daily Home Value Index showed the upswing gathering momentum, especially in cities such as Brisbane where the index is up 1.0% over the past four weeks whilst the Sydney property market still remains the strongest.. Considering housing affordability measures remain stretched such a strong rate of growth is surprising, with many experts predicting that this price rise will not be sustainable in the long term.

Low Supply vs High Demand

As mentioned above, decade-low listing numbers and high demand has lead to fierce competition between buyers – as seen in auction clearance rates that have been holding at 70% or higher in recent weeks.

In a time where the market traditionally tends to cool off, the stats suggest that, if anything, the market is gathering momentum instead of slowing down. Strong clearance rates as well as faster selling times and reduced discounting rates indicate that it’s definitely a vendor’s market.

Recent data from the National Housing Finance and Investment Corporation shows a 115,000 dwelling undersupply for 2028.

Interest Rates Continue to Rise

The biggest challenge for potential and current property owners? Interest rates. With interest rates continuing to rise, demonstrating an ability to service a loan remains one of the biggest challenges for prospective buyers to face.

Interest rates are high, but assessment levels are three percentage points higher again – making it even harder for buyers to enter the market or secure their dream property.

Economic Uncertainty

In addition to rising interest rates, we’re also in the midst of a cost of living crisis where consumer confidence is low.

Should RBA cut interest rates, there’s a good change we would see a pick-up in both buyer and seller activity. It’s also highly likely that lower interest rates would be the catalyst for a further uptick in housing values, however, we’re not expecting a rate cut anytime soon and there’s speculation that rates may continue to rise this year.

Economists are split on their forecasts with predictions for further rate hikes, stability and some cuts later this year – all contributing to uncertainty and low consumer confidence levels.

A Helping Hand

Government policies and regulations play a crucial role in shaping the property market. Policies related to taxation, lending practices, and housing affordability can have both direct and indirect effects on the market.

At the moment, first home buyers in particular have a wide variety of grants, concessions and schemes available to them (outlined in our First Home Buyer Update here) that could make purchasing a property easier and more affordable.

Migration Predicted to Recover

With net overseas migration set to fully recover to pre-pandemic levels there will be more pressure on the housing market than we’ve seen in recent years.

With the return of international students and the surge in migration, it is estimated that an extra half a million people will be looking for somewhere to live in Australia in the next two years.

Low vacancy rates bringing investors into the market

We are experiencing a rental crisis across the country, with historically low vacancy rates encouraging more investors into the market. Unfortunately for investors, rising interest rates and property prices have made this challenging – as well as rising building costs making it harder for investors and developers to buy and renovate or rebuild.

Is now the right time to buy or sell?

In short? Maybe. Unfortunately it’s not a one size fits all answer.

Ultimately, making an informed choice that aligns with your own circumstances and long term goals is key when navigating the property market.

Luckily, we’re here to help. We’ll sit down to work out what your goals are, what your property budget may be and how we can help you secure a property. Contact us today to get started!

Why the Home Loan Inquiry should make you reconsider your loan

Aug 2, 2022 | Refinance

In October 2019, the Treasurer direct the ACCC to conduct an enquiry into home loan pricing, wanting the commission to investigate two key concerns:

The prices charged for home loans since 1 January 2019
Impediments to borrowers switching to alternative lenders

Whilst the interim report, focusing on home loan prices, was released in April 2020, the final report has now been released which has found that many Australians with older home loans continue to pay significantly higher interest rates than those with newer loans.

This report also focuses on impediments to borrowers switching to alternative lenders and identifies recommendations to address these impediments. The ACCC also recommended that the Government action a further 5-year monitoring enquiry into pricing and competition in the home loan market.

So, let’s break down the recommendations outlined in the report and how you can action that advice yourself today.

All lenders should be required to provide an annual prompt to borrowers with older variable rates (loans three or more years old)

This recommendation is to encourage borrowers to engage in the home loan market so that they can potentially switch lenders or home loan products.

The problem, however, is that for a lender, complacency drives income. Often referred to as the “loyalty tax”, lenders often make a lot more money on customers who “set and forget” their loans – sticking with the original loan for years, if not, the full length of the loan.

Solving the problem now: Instead of waiting for the government to set requirements for lenders, you can act today.

At Sanford Finance, we do this for you, monitoring and reviewing every client’s loan annually, ensuring you always have the best loan product for your needs. In addition to this, we also encourage clients to get in contact should they feel their rate is too high or their circumstances have changed, and the loan product no longer suits their needs.

All lenders should provide borrowers with a standardised form to discharge the borrower’s home loan from their existing lender

The goal of this recommendation is to make it easier for borrowers to switch loans – providing a form which is easy to access, fill out and submit. They also recommended that a 10-day time limit be placed on lenders to complete the discharge process.

Currently the process to switch from one lender to another varies greatly depending on which lender you are currently with. For some lenders, the process is made simple whilst others make the task arduous and frustrating, often leading to borrowers sticking with their loan just to avoid the process.

Solving the problem now: If the thought of refinancing or switching lenders stresses you out (or feels like another thing on the to-do list that you just don’t have time for) we’re here to help. Whilst we can guarantee the discharge process will be done in 10 days, our team will do everything in our power to speed up the process.

Get in touch with our team today so we can assess your loan and find a loan product that’s more suited to your needs.

Who should consider renegotiating their loan?

With the Home Loan Inquiry identifying that, as at December 2019, almost half of all variable rate loans were at least four years old, most Australians should take the time to look at their loan and see if there is a better rate or loan product available.

As of September 2020, borrowers with home loans between three and five years old were, on average, paying around 58 basis points above the interest rate for new loans. Borrowers with home loans between five and ten years old were, on average, paying around 71 basis points above the average interest rate for new loans. Borrowers with loans older than ten years old were, on average, paying around 104 basis points above the average interest rate for new loans.

Many of these borrowers could save a significant amount of money by switching to a new home loan. For example, if a borrower with a home loan of $250,000 switched to a home loan with an interest rate 58 basis points lower than their existing loan, they would save over $1,400 in interest in the first year. Over the remaining life of their loan, that borrower would save over $17,000 in interest in net present value terms.

Where should you start?

Thinking that now is the right time to look at your loan and find a better deal?

Get in touch with our team today to start the ball rolling. We’ll work with you to look at your current loan, your present circumstances and will recommend alternate loans that are better suited to your needs.

How consolidating your debt could save you money

Jun 8, 2022 | Debt Consolidation

With interest rates and the cost of living rising, many Australians are searching for ways they can save money each month – but there’s one way you may not have thought of.

Debt consolidation involves bringing your existing debts together into one new loan. The objective is to reduce the number of individual payments you make and reduce the interest rate you are paying on your more expensive debts.

Who should consider debt consolidation?

Debt consolidation may be something to consider if you are:

Paying a very high interest rate on your debts – for example a credit card, cash advance debts or store credit purchases.
Managing multiple debt repayments and struggling to keep track of what is due and when.
Getting into a credit trap where all of your spare income is used to pay interest, but you don’t have enough left over to reduce your debt balances.

What does debt consolidation look like?

There are several different strategies that can be used to consolidate debts, including:

Moving debts to a new credit facility (e.g. a personal loan or mortgage) with a lower rate of interest or lower fees.
Lengthening the time of existing loans (e.g. taking a mortgage debt back out to the 30-year loan term).
Changing the repayment terms on an existing loan to interest only.

A combination of these strategies can also be used, depending on your circumstances.

What are the benefits of debt consolidation?

Usually, debt consolidation is implemented to make it easier for you to pay your debts, however, there are numerous other benefits, including:

Potential cash savings – Potentially the biggest benefit of debt consolidation. By consolidating your debt into a loan charging a lower interest rate, you have the potential to save interest on monthly repayments and reduce your overall interest.
Lower repayments – Reducing the interest rate and spreading out repayments over time could potentially reduce the monthly repayment due.
Simplicity – One loan repayment is a lot easier to manage than juggling several repayments.
Savings on interest and fees – Debt consolidation could potentially reduce the amount of interest you pay on high-interest facilities such as credit cards and save you money on fees for multiple credit facilities. This may make it easier to pay back your debts.
Stress relief – Specialist lenders are available that may lend to you if you have missed repayments on your current debts, or if you have a poor credit history.

What is important to remember about debt consolidation?

It’s important to remember that a debt consolidation strategy doesn’t reduce your debt – it just makes your repayments more manageable.

A debt consolidation strategy should be implemented in combination with a change to your spending behaviour, so that you can work to reduce your overall debt level over time.

Want to chat about debt consolidation?

Give our team a call on 9095 6888