The Reserve Bank of Australia has announced another rate cut in 2025 as inflation continues to ease.

In May, annual trimmed mean inflation rose 2.4%, down from 2.8% the previous month, according to the Australian Bureau of Statistics. This marked the sixth consecutive month that inflation was within the RBA’s 2-3% target range.

Currently, the RBA is projecting that the cash rate will hit 3.2% by June 2026, down from 3.85% at the moment.

For childcare centre owner-occupiers, this outlook couldopen the door to new opportunities, and being ready to act could make all thedifference.

What do lower rates mean for buyers?

Lower interest rates generally mean reduced borrowing costs,which can be especially valuable for operators looking to purchase or upgradetheir premises.

With cheaper finance, owner-occupiers maybe able to expandtheir borrowing capacity, putting higher-quality or better-located propertieswithin reach.

This could be particularly useful for those in growth corridors or shifting away from CBD locations where demand has softened as work-from-home becomes more popular.

What do lower rates mean for existing loans?

Even if you’re not planning to buy, a rate cut could improveyour bottom line. Operators already servicing a mortgage could benefit fromlower repayments, freeing up cash flow that can be reinvested into staffing,new equipment purchases or other operational expenses.

For centres with ageing buildings, this additional moneycould help pay for the renovations you might have been putting off.

Now might be a good time to reassess your loans

Now could be a strategic time for you to reassess yourfinance arrangements. Whether you’re on a fixed or variable rate, it’s worthreviewing your current loan structure to ensure it still aligns with your goalsand the changing market.

After three rate cuts, lenders have already adjusted theirmortgage rates. First, you should confirm that your lender has passed on therate cuts. Second, with the help of a specialist finance broker, you cancompare rates across lenders. This might reveal opportunities to reduce yourrepayments or unlock flexible options.

Beyond interest rates, now could also be a good time toreconsider your loan features and terms. You might want to add an offsetaccount to improve cashflow management, extend or shorten your loan term ornegotiate more flexible payment options that accommodate fluctuatingenrolments.

Thinking about how falling interest rates could work inyour favour? Whether you're planning to buy, upgrade or simply want to makesure you're getting a suitable deal on your current loan, now’s the time toact. The team at Ligo Finance can help you reassess your loan structure andexplore finance options tailored to your childcare centre. Get in touch today.

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