By Brett White, Licensee – RE/MAX Extreme
If you’ve been keeping an eye on interest rate changes and wondering how it all ties into your mortgage or your property’s value here in Perth — you’re definitely not alone. This is something I chat about with local homeowners, investors, and buyers all the time. So I thought I’d take a moment to unpack what the cash rate really means, how it’s changed over time, and what it could signal for the market moving forward — especially after the two recent rate cuts in 2025.
What the Cash Rate Really Means
The Reserve Bank of Australia (RBA) sets the cash rate as a tool to influence the broader economy. It affects the interest rates on things like your home loan, savings account, or term deposit. A lower cash rate usually means borrowing becomes cheaper, which often increases buyer demand. When rates rise, borrowing is more expensive — and the housing market tends to cool.
Right now, as of June 2025, the cash rate is sitting at 3.85% following two 0.25% cuts already this year (one in February and one in May). This signals that the RBA is seeing inflation slow and is cautiously adjusting policy to support ongoing economic stability.
A Quick Recap of Why the RBA Changes Rates
It’s helpful to remember that rate changes aren’t random — they’re a response to what’s happening in the broader economy. The RBA looks at:
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Inflation: Too high? Raise rates to slow spending. Too low? Cut rates to encourage more activity.
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Employment: Strong job growth gives the RBA more room to move. High unemployment usually leads to cuts.
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Economic growth: If things slow too much, they’ll cut to support the economy.
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Global pressures: Factors like supply chain issues or global conflict can influence rate decisions too.
Where We’ve Been: Some Historical Perspective
Interest rates might feel high now compared to the ultra-low period after COVID, but they’re still well below historical norms.
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In 1989, the cash rate hit a staggering 17%. Mortgage repayments back then were eating up more than half of a full-time income.
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By 1994, the rate had dropped to 5.5%, and it’s generally trended downward since.
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During COVID, the RBA slashed the rate to a record low 0.10%, where it stayed until May 2022.
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From there, we saw steady increases to combat inflation, until this year’s cuts brought it down from 4.35% to 3.85%.
This movement back and forth is the RBA trying to “fine-tune” the economy — and it’s something we’ll likely see continue.
What It’s Looked Like Here in Perth
National headlines tend to focus on Sydney and Melbourne, but Perth — especially the northern suburbs — has been on its own path. Even during periods of rising rates, we saw continued buyer interest and price growth across suburbs like Ocean Reef, Burns Beach, Kinross, and Currambine.
Right now, listings are still tight, and many homes are selling within days (particularly in the sub $1,000,000 price bracket) — sometimes with multiple offers. While the recent rate cuts won’t change your mortgage overnight, they’re a sign of renewed confidence in the market and a possible easing of pressure for borrowers.
Then vs. Now: Is It Really Harder to Buy?
It’s a question I hear a lot. Was it easier to buy back in the day?
Back in the early 90s, property prices were lower, but interest rates were sky-high. A $100,000 loan at 17% interest would have cost you about $1,425 a month — that’s around $3,700 in today’s dollars. Fast forward to now, and yes, rates are lower — but loan sizes are much bigger, especially in metro areas.
For example, a $700,000 loan today at 6.5% would cost about $4,400 per month — and in the first year, you’d only chip away about $8,000 of the principal. That’s a big commitment, especially with the cost of living being what it is.
It really highlights how important it is to get the right advice and make decisions that suit your own financial situation — not just what the headlines say.
What It Means for You Moving Forward
With inflation trending down, there’s a good chance the RBA may continue easing rates through the back half of 2025 — but nothing’s guaranteed. If you’re a homeowner or thinking about buying or selling, now’s a good time to review your situation:
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Could your loan be structured better?
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Are you building equity in your property?
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Is now a smart time to upsize, downsize, or invest?
If you’re unsure where to start or just want to chat things through, we’re here to help.
You can reach out to me directly, or speak with Kathy or Cristina from the Brett White Team. We know the northern suburbs inside out, and we’re always happy to give you straightforward advice with no pressure.
Disclaimer: This article is for general information purposes only and is not financial advice. Always seek guidance from a qualified financial professional before making decisions based on interest rate movements.
