Rates Are Falling, Prices Are Rising — Here’s What You Should Do Now...

By James Pastras

Melbourne’s housing market is heating up again — and experts say now’s not the time to lock in your home loan.

Melbourne’s housing market is heating up again in 2025

Following a 0.25% interest rate cut by the Reserve Bank this week, property prices are expected to rise by around $23,000 over the next year. That’s due to the second cut this year creating momentum for sellers and triggering stronger buyer competition.

But Smart Lending’s Melissa Gielnik urges homeowners not to fix their interest rates just yet. With more rate cuts likely by August, fixing now could mean missing out on better deals later this year. While some fixed rates are hovering around 5.2%, Gielnik believes we could see them drop to 5% by year’s end.

Variable rates, currently at 5.84%, could soon fall to 5.59% — but only if banks pass the full cut on. And that’s not guaranteed. Gielnik warns that not all lenders will treat customers equally, so it’s smart to talk to your broker and watch your lender closely.

💡 Tip: If you can, keep paying your current repayments and stash the extra into an offset account — it could save you tens of thousands in the long run.

📈 What about property prices?PropTrack data shows early signs of growth:

• House prices in Melbourne rose 0.3% since February

• Unit prices jumped 1.5%, hitting $588,000

Economist Eleanor Creagh says while it’s too early to call it a trend, these numbers show renewed buyer energy, especially from first-home buyers facing affordability challenges.

And with twice as many suburbs recording price gains, Creagh expects the upward trend to continue this year — especially if more cuts are introduced.

🏡 The market is shifting in favour of sellers, but buyers may still have a short window to act before prices rise further.

Bottom line?

• Hold off fixing your rate for a few months

• Check your lender’s response to the RBA cut

• Expect moderate price growth, especially in the next 6–12 months

• And if you’re buying — act soon, but stay savvy