RBA Poised for Rate Cut Tomorrow. What It Means for Landlords

1. What’s Actually Happening

All the signals are pointing to a 0.25 percentage point cut at the RBA’s meeting on Tuesday, 12 August 2025, likely lowering the cash rate from 3.85% to 3.60%. A Reuters poll shows unanimous agreement among economists and most forecast at least one more cut by year‑end, potentially down to 3.35% or even 3.10% by March 2026.

2. Why It Matters. Direct Impact on Landlords

  • Lower borrowing costs: Fixed- or variable-rate investment loans should see cheaper repayments. One estimate suggests a $600K investment loan could drop by about $97/month

  • Earnings boost & refinancing potential: Reduced interest rates can translate to better cash flow, improved yields and opportunities to refinance at more attractive terms.

3. Strategic Considerations for Landlords

A. Don’t Assume Rent Relief for Tenants
While rising investor costs may traditionally be passed to renters the relationship isn't direct and immediate. In fact, rents don’t necessarily drop when interest rates do. Rent is more influenced by supply and demand, especially low vacancy rates.

B. Be Smart About Borrowing
Interest rates are trending lower but the RBA is cautious. Further cuts depend on inflation and employment data.Landlords should explore refinancing to lock in lower costs but avoid betting on steep continuations without backing.

C. Use It to Your Advantage

  • Refinance or restructure loans to improve margins or diversify debt structure.

  • Plan for tenant turnover or improvements to stay competitive even without pass-through of rate cuts, better performance matters.

  • Watch property values closely; rate cuts can stoke price gains, potentially aiding asset growth especially where demand is active

4. What to Communicate to Your Audience

  • This rate cut is a welcome breather for landlords but isn’t a magic bullet.

  • Borrowing becomes healthier but rental market fundamentals still rule rent and value dynamics.

  • Protect your position size refinancing opportunities but stay alert to macro shifts.

  • Don’t raise expectations for tenants, no immediate reasons to lower rents.

Disclaimer: This article is for general information purposes only and does not constitute financial advice. Please seek professional advice tailored to your circumstances before making investment or financial decisions.

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