The Impact of Interest Rate Drops to Your Borrowing Capacity

overview.

If rates drop, what does it actually do to how much you can borrow? Dad runs two scenarios: a 0.5% cut that could add about $30k to your borrowing, and a 1% cut that could add up to $80k, and what that means for first home buyers.

Dad — John Kefalianos, finance broker — watches rate moves feed straight into what clients can borrow. He runs the two scenarios with me here.

"A rate cut sounds like cheaper repayments. For a first home buyer it is often something bigger: a larger door to walk through."

John Kefalianos

what you'll learn.

• How a rate cut feeds directly into borrowing capacity
• The numbers on a 0.5% versus a 1% cut
• Why the same cut lands differently across lenders
• What falling rates tend to do to the market you're buying into

Prefer to read? Grab the free first home buyer guides.

part of: home loans guide.

chapters.

Tap a chapter to jump the video to that point.

1. 00:00 Introduction
2. 00:31 Current Borrowing Capacity Scenario
3. 01:12 Impact of a 0.5% Rate Cut
4. 02:11 Impact of a 1% Rate Cut
5. 02:58 Benefits for First Home Buyers
6. 03:19 Market Implications of Rate Drops
7. 03:30 Conclusion

links Nicola & John mentioned.