Falling interest rates and easing inflation are breathing new life into Australia’s loan markets, according to the latest survey from the Mortgage & Finance Association of Australia (MFAA).
The report – the MFAA's "August 2025 Member Sentiment Survey" – was completed by more than 2% of MFAA members, (or roughly 333 mortgage brokers), and asked brokers their thoughts on borrower sentiment, what segments are gaining traction and which types of clients are most active.
The results showed that while the majority of borrowers remained neutral (47%, down 3% since a similar survey in February 2025), approximately 34% of brokers surveyed said borrowers are feeling positive about their financial outlook – an increase of 1.5%, in the same time period. Meanwhile, 19% of borrowers were viewed as having a negative outlook, up 1.5% since February.
“There are several factors that are contributing to this," said Anja Pannek, MFAA's chief executive officer. "Interest rates fell in February, May and August, inflation has eased, while modest wage growth, the stage three tax cuts and changes to [Higher Education Contribution Scheme] (HECS) debt have all had an impact.”
The Reserve Bank of Australia (RBA) cut the official cash rate (OCR) by 25 basis points in August, the third time the bank has eased monetary policy this year. While market players are split on whether there will be more rate reductions at the central bank's upcoming meeting later this month, many — including all four of Australia's Big Four banks — anticipate further rate reductions at the bank's November meeting.
At the same time, inflation continues to fall. The June quarterly consumer price index (CPI) confirmed that inflation continues to trend downward. Both headline CPI and trimmed mean inflation declined over the quarter, with annual CPI easing to 2.1%, down from 2.4% in the previous period, while trimmed mean inflation dipped to 2.7%, compared with 2.9% in the prior quarter.
Property equity and job security are also driving positive momentum, the survey said.
Meanwhile, some borrowers remain pessimistic, voicing growing frustration over rising living costs and Australia’s ongoing housing shortage. And, for the first time, concerns about unemployment are also emerging. In February, just 4.8% of borrowers cited job security as a worry. By August, that figure had jumped to 18.3%.
Unemployment held steady at a low 4.2% in August, the same as July. However, some economists are forecasting the early signs of a softening labour market.
Pannek added that lingering global uncertainty and the impact of AI could cause increased anxiety about job security.
“While we recognise that most borrowers have a more optimistic view of their financial situation, we also acknowledge that some mortgage holders are struggling, due to cost-of-living pressures and job uncertainty," she said. "They are looking to mortgage brokers for support and to help them understand their options."
In fact, brokers are more in demand than ever. According to the MFAA's latest data, mortgage brokers settled approximately 76.8% of all new residential home loans during the March 2025 quarter, up slightly from the December 2024 quarter at approximately 76%. And the numbers are expected to keep rising.
The August Member Sentiment Survey also found that 97% of mortgage brokers have returning clients.
Brokers are reporting that more borrowers are able to refinance, thanks in part to lower interest rates and increased borrowing capacities. In fact, 92% of brokers polled said borrowers are using a broker to refinance for the first time.
“Brokers are reporting far fewer clients are unable to refinance due to serviceability requirements than in any of our previous surveys,” Pannek said. “The situation has improved over the past two years. Even since February 2025, the number of clients brokers have helped refinance has doubled.
“Improved economic conditions mean refinancing to a more affordable home loan could be an achievable option today," the CEO added.
In addition, more brokers than ever are broadening their skill sets, offering support in areas like budgeting strategies, exploring alternative lenders and navigating financial hardship options, the survey found.
Pannek said brokers play an important role "in educating clients, building financial literacy, [and] providing guidance."
New entrants to the housing market remain a key segment for brokers. Approximately 98% of mortgage brokers' client base includes first-time buyers, according to the survey.
“The Federal government’s 5% Deposit Scheme (previously known as the Home Guarantee Scheme) is expanding on 1 October, so we are keen to monitor the impact on borrower sentiment," Pannek said. “Our members tell us there’s plenty of interest in accessing the scheme. This is a positive."
