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Market Predictions for 2025

29 Jan 2025 | Richard Glynn

Welcome to our first Article of 2025. We wish you all a wonderful year.

Market expectations and evidence suggest a slight decrease in cash rate through 2025 from its current rate of 4.35%.

While some optimists and lenders speculate that rates will fall by February this year, market indicators are not so telling.

Unemployment has been increasing with a rate of 4.1% in October 2024 compared to 3.5% in late 2022. Employment is one of the Reserve Bank's metrics for interest rate movement, since a weakening job market could imply that the economy should be stimulated via lower cash rate. However, figures from the Australian Bureau of Statistics create a mixed outlook due to the surge in part-time jobs. Seasonally adjusted, December 2024 saw an additional 56,300 employed compared to drops of 65,100 and 14,600 in 2023 and 2022.

Key statistics - Seasonally adjusted

November December Monthly change Monthly change (%)
2024
Employed people 14,528,100 14,584,400 56,300 0.4%
Unemployed people 593,800 604,100 10,300 1.7%
Unemployment rate 3.9% 4.0% 0.1 pts N/A
2023
Employed people 14,266,200 14,201,100 -65,100 -0.50%
Unemployed people 574,400 573,600 -800 -0.10%
Unemployment rate 3.90% 3.90% 0.0 pts N/A
2022
Employed people 13,761,700 13,747,100 -14,600 -0.10%
Unemployed people 494,000 499,800 5,800 1.20%
Unemployment rate 3.50% 3.50% 0.0 pts N/A

Data extracted from the Australian Bureau of Statistics

Examining interest rates at Major and Other banks:

  • Variable rates average 6.29%p.a.
  • One-year fixed rates average 6.05%p.a.
  • Three-year fixed rates average 5.85p.a.
  • Owner Occupied, Principal and Interest repayments*

The difference between variable rates and fixed rates indicates that banks expect only a small drop in basis points this year.

We note that over the last 25 years, the average RBA cash rate has been 3.4%p.a. (see chart below).


Data extracted from the Reserve Bank of Australia

Although rates are slated to decrease marginally, it is important to maintain a healthy scepticism when looking to obtain finance. Glynn Finance will be able to provide you with all scenarios with any fluctuations in interest rates, whether they be increases or decreases.

The next RBA meeting is scheduled for the 17th of February. The second for the 2025 will be on March 31st then May 19th.

We look forward to providing you another update then! In the meantime, please do not hesitate to contact us with any questions you may have.