THE Reserve Bank of Australia has cut the cash rate from 4.35 per cent to 4.1 per cent—the first decrease in over three years—following months of pressure amid rising living costs and a housing shortage.

The decision, announced by RBA Governor Michele Bullock on 18 February, comes after rates remained at a 13-year high for 14 months.

With major banks and lenders passing on the cut, the move is expected to have significant implications for borrowers and the local property market.

The rate cut is expected to ease financial pressure on borrowers in Mansfield Shire, where housing affordability and lending conditions have been key concerns, while also saving Australians with an average mortgage of $640,000 roughly $100 a month—an opportunity local mortgage broker John Mongan, Director at Peak Finance Broking, advises homeowners to use wisely.

“I’ve been calling my clients to encourage them to continue paying the repayments they were paying before the RBA dropped the cash rate,” he said.

“By paying a higher amount now that the interest rates are lower, you are paying off more of your principal which will help you pay off your loan faster.

“By March 4, the big four and many tier two lenders will have passed the rate cut on, which is great.

“It makes it a great time to buy, to refinance an existing mortgage, or to buy an investment property.

“I encourage any one who has previously looked at their borrowing power to look again, it’s likely your borrowing power has increased.

“We are having a lot of luck helping first home buyers get into the market, there are so many schemes to help first home buyers at the moment.

"It's also a great time for those looking to buy an investment property.

“Everyone wants to buy when the market is down and about to go up but it’s also a great time to buy when the market is stable."

While house prices in Sydney and Melbourne have surged beyond advertised ranges due to ongoing shortages, Mansfield Shire's market has been slower, with many properties sitting unsold for months despite speculation that the rate cut could drive prices up.

McGrath Mansfield is expecting a spike in buyer activity following this first cut with a more meaningful increase to come once we’ve seen three or four rate reductions.

“There has been a slight shift in our buyer inquiry,” said Kate Mcdougall, Principal of McGrath Mansfield.

“It is a great time to buy at the moment as prices will only increase as the market strengthens.

“This autumn season may be a good time to buy given price weakness in many areas since November.

“So, families seeking forever homes may be smart to buy this Autumn before a rate-inspired price upswing begins.”

While McGrath Mansfield - and borrowers in general - are hoping for further rate cuts, RBA Governor Michele Bullock remained noncommittal, citing the need for higher interest rates to curb inflation and restrain economic activity.

"We cannot declare victory on inflation just yet," she said.

"It is not good enough for inflation to be back in the target range temporarily.

"We need to be confident that is returning to the target range sustainably.

"There’s also a lot of uncertainty around the global outlook at the moment.

"One of the things we’re cautious about is the possibility that policy unpredictability could lead to slower growth but at the moment it’s too soon to tell.

"For these reasons I want to be very clear that today’s decision does not imply that further rate cuts along the lines suggested by the market are coming.

"The market is expecting quite a few more interest rate cuts to the middle of next year; about three more on top of this.

"Whether or not that eventuates will depend very much on the data."