The move, announced on April Fools' Day, is no joke for Australian homeowners, many of whom are hoping for relief from high interest rates. According to Finder's RBA Cash Rate Survey™, nearly all economists surveyed (94 per cent) correctly predicted the RBA's decision to hold rates. However, there is a broad consensus that rate cuts are on the horizon.

Experts Weigh In on Future Rate Cuts

"While the RBA has opted to keep the cash rate steady in April, the consensus among experts is clear: further rate cuts are on their way," said Graham Cooke, Head of Consumer Research at Finder. Cooke also urged homeowners to be proactive, suggesting that those with home loan interest rates above 5 per cent could potentially save thousands by switching lenders.

Tim Lawless, Head of Research at CoreLogic, emphasized that the quarterly inflation outcome, set for release on April 30, would be a key determinant for future rate decisions. "If core inflation holds below the 3% mark, which seems highly probable, it is looking more likely that we will see a second cut to the cash rate," he said. Financial markets have already priced in two more rate cuts this year, with economists from the Big Four banks forecasting between one and three reductions by the end of 2024.

Leanne Pilkington, CEO of Laing+Simmons and president of the Real Estate Institute of Australia (REIA), highlighted that recent changes in Australia’s economy are paving the way for a possible cut later on in the year. "As well as sustained cost-of-living pressure and moderating inflation, the unexpected hit to employment figures has widened the window of opportunity for the RBA to cut rates, which it is expected to do in coming months anyway," Pilkington said.

Founder and CEO of Metropole Property Strategists, Michael Yardney, shared his viewpoint that the RBA’s decision was motivated by a desire to "assess the lagging impact of previous rate changes on the economy." "The bank will be keen to observe how the recent rate drop filters through various sectors, including housing, retail and manufacturing, before making further adjustments," Yardney said.

Property Market Sentiment Divided

The Finder survey also revealed a divide in opinions on whether now is the right time to buy property. A slight majority of experts believe it is, while 45 per cent disagree. Consumer sentiment remains more cautious, with only 37 per cent of Australians considering it a good time to enter the market.

Optimism varies by region, with 40 per cent of residents in Victoria and South Australia feeling positive about the market, compared to just 32 per cent in Western Australia. Meanwhile, nearly two-thirds of experts predict rental price growth will slow in 2025.

University of Western Australia economist Jakob Madsen cautioned that immigration trends could continue to influence house prices. "House prices have reached a level where they cannot increase much more within the next couple of years," he said. "But it all depends on immigration. If immigration remains high, house prices will keep growing."

REA Group senior economist Eleanor Creagh noted that while inflation is moderating, the RBA remains cautious. "The decision reflects the RBA’s cautious and data-dependent approach, opting to pause as it monitors inflation and labour market trends before any further policy moves," she said. "The market is now looking to the RBA’s May meeting and the March quarter inflation print as the next key trigger for potential cuts."

Although Creagh acknowledged that affordability in the housing market "remains stretched," she said that the last interest rate cut has improved conditions for buyers and sellers alike. "Housing market conditions have firmed since February’s rate cut. Buyer sentiment has improved, borrowing capacities have increased, and price growth has resumed," she said. However, she cautioned that the current growth cycle is "likely to be more muted compared to the rapid upswings in home prices seen in earlier interest rate easing periods."

Global Trade Concerns Loom Over Economic Outlook

Beyond Australia's economy, economists are also keeping an eye on global trade policies. Nearly half (44 per cent) of surveyed experts believe that tariffs proposed by U.S. President Donald Trump could trigger a global recession if they remain in place, with an additional 7 per cent saying a downturn is "very likely."

"You're unlikely to find an economist who will say that import tariffs are a good idea," said Cooke. "The only uncertainty that remains is how permanent the tariffs will be, and how much damage they will do."

Stella Huangfu from the University of Sydney warned that Australian households could see higher prices on imported goods and a potential slowdown in wage growth. "The broader economic slowdown might also prompt the RBA to hold off on cutting interest rates, meaning higher mortgage repayments could hang around longer," Huangfu said.

However, David Robertson from Bendigo Bank believes the local impact will be minimal, as long as Australia does not introduce retaliatory tariffs of its own.

Outlook for Interest Rates

Despite concerns about global trade, most experts (75 per cent) have not adjusted their cash rate forecasts due to Trump's tariff plans. While 18 per cent expect fewer rate cuts as a result of potential economic disruptions, 7 per cent foresee more cuts from the RBA in response to global conditions.

Tim Lawless of CoreLogic remains optimistic about the rate outlook. "The outlook for interest rates remains positive, with the cash rate likely to reduce further in 2025, but only gradually."

For now, the RBA's decision to hold the cash rate at 4.10 per cent keeps mortgage rates steady, but with growing speculation that rate cuts could come in the near future, borrowers and investors will be watching closely for any signs of a shift in monetary policy.