Should You Build Now After the Latest Interest Rate Cut?

26th May 2025

Finance & Budgeting Pre-Construction First Home Buyer Investor Upsizing & Downsizing News & Industry Insights

With interest rates dropping again, is now the right time to build a home? In this episode, Colin and Darren break down what the latest rate cut really means, how it impacts your borrowing power, and why buyers have a short window to act before prices rise.

Should You Build Now After the Latest Interest Rate Cut?

The Reserve Bank has made another move, cutting the cash rate by 0.25 percent - and naturally, everyone’s asking the same question: is now the right time to build a new home?

In this episode of the Home Building Hub Podcast, Colin Bischof and Darren Brennan break down what this rate cut really means for home buyers and why timing your move could make all the difference.

What Does the Interest Rate Cut Mean for You?

• The official cash rate dropped from 4.1% to 3.85%.

• On a $600,000 loan, this could save around $90 - $100 a month.

• More importantly, it improves your borrowing capacity by approximately $20,000 - $25,000 (depending on your financial position).

But is that enough reason to rush into building?

Why Now Is a Strategic Window

Darren explains that we are in a rare window where buyers can act ahead of the competition:

• Interest rates are easing

• Election uncertainty is over

• Buyer confidence is on the rise

• Competition hasn’t fully returned

This means:

• Better access to premium properties

• Builders and developers are still offering significant incentives

• Less buyer competition = more negotiating power

But that window is closing quickly.

What Happens If You Wait?

• Developers are already reducing or removing rebates

• Demand is increasing and titled land is drying up, especially in Victoria

• You risk paying more for less - smaller homes or inferior land for the same price

Historical Trends: What We’ve Seen Before

Interest rate cuts typically lead to property price increases:

• 1986: +11%

• 2003: +32%

• 2021 (post-COVID): +27%

Those who acted during or right after rate cuts historically gained significant equity. Waiting often costs more than it saves.

Practical Tips to Get Moving

• Talk to a mortgage broker today. Your borrowing power may have increased.

• Don’t procrastinate on providing pay slips and documentation.

• Start researching land and home designs now.

• Understand your local market - suburbs like Clyde, Cranbourne, and Pakenham in Victoria are seeing strong movement.

A Dose of Reality

If you’ve been waiting for signs - this is it. As Colin explains:

“In three months from now, you will not buy a house or land for the same price you can today.”

Builders and developers are recovering from tough years and offering incentives to fill pipelines. Once those pipelines are full, rebates vanish and prices firm up.

You don’t need to rush. But you do need to act smartly. Do your homework, talk to professionals, and if you're financially ready - start the process.

Key Takeaways

• A 0.25% interest rate cut has improved both savings and borrowing power.

• We’re in a short-term window with lower competition and higher incentives.

• Builders and developers are offering discounts that won’t last much longer.

• Historically, property prices rise significantly after rate cuts.

• Acting now could save thousands in the long term.

Listen to the full episode here: 🎧 Another Interest Rate Cut Confirmed... So should you build now?

Glossary of Terms

• Interest Rate Cut: A reduction in the official cash rate set by the Reserve Bank, influencing borrowing costs.

• Titled Land: Land that is ready to build on, with formal ownership documents in place.

• Borrowing Capacity: The amount a bank is willing to lend based on your financial situation.

• Developer Rebate: A discount or cash-back offer from land developers to encourage purchase.

Frequently Asked Questions

Q: Will interest rates keep dropping? A: While no one can guarantee, major banks are predicting further cuts throughout the year.

Q: Should I wait for house prices to drop more? A: Historical data shows prices tend to rise after rate cuts. Waiting may cost more than it saves.

Q: I’m not ready yet – what should I do? A: Speak with a broker now to understand your options and be prepared to act when the time is right.

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process - completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips.

Explore more episodes at http://www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.