The real estate market has been through a rollercoaster of interest rate changes in recent years. Understanding these shifts—and what they mean for you—can give you a real edge whether you’re buying or selling a home.
After more than a decade of stability, the first interest rate increase in over 11 years occurred in May 2022, with a +0.25 base point hike. This marked a turning point in monetary policy, as inflation and economic recovery concerns drove the need for tighter financial conditions.
From there, we saw 10 consecutive interest rate increases, a series of hikes that significantly impacted mortgage rates, borrowing power, and ultimately the pace of home sales. These increases continued until June 2023, when the central bank paused for the first time in over a year. Last increase was in November 2023 being the Cash Rate to 4.35%
Then, in February 2025 , buyers and sellers alike received some good news: the first rate decreases since the tightening cycle began.
Now, in May 2025, we’ve seen another cut: a further -0.25 base point reduction, lowering the official interest rate to 3.85%. This signals growing confidence in the economy and offers a more supportive environment for property buyers and sellers.
For the real estate market, this is welcome news. Lower interest rates typically improve borrowing power, increase buyer demand, and open the door for new opportunities in a market that’s ready to move forward.
What Does This Mean for You?
For Buyers:
- Improved Affordability: As interest rates start to come down, borrowing becomes more affordable. This can increase your buying power and make monthly mortgage payments more manageable.
- More Inventory Choices: With improved market confidence, more sellers are listing homes, giving buyers more options to choose from.
For Sellers:
- More Buyer Activity: Lower rates mean more buyers in the market, which can lead to quicker sales and better offers.
- Stabilizing Prices: As demand increases, home prices tend to stabilize or rise—great news if you're hoping to sell for top dollar.
Tips for Buyers and Sellers in Today’s Market
Buyer Tips:
- Get Pre-Approved Early: Lock in a rate now before future increases or be prepared to take advantage of potential further decreases.
- Understand Your Budget: Even at 4.10%, rates still impact long-term affordability—work with a trusted mortgage advisor.
- Don’t Wait Too Long: With rates starting to drop, competition will heat up. The best time to buy may be before others jump back in.
Seller Tips:
- Price Strategically: Use the renewed buyer interest to your advantage but stay competitive with your pricing.
- Highlight Affordability: Work with your agent to showcase how lower rates make your home more affordable in marketing materials.
- Stage for Success: With more eyes on the market, first impressions matter. Make sure your home shows its best.
Why This Market Shift Benefits Both Buyers & Sellers
This new phase of the interest rate cycle brings balance to the real estate market. Buyers gain more purchasing power, while sellers benefit from renewed demand and more competitive offers. It's a win-win scenario, creating momentum and confidence for both sides.
If you've been waiting on the sidelines, now might be the perfect time to make your move.