In case you missed it, we’re talking about RBA’s announcement the other week that they had cut interest rates from 2% to an all-time low of 1.75%.

Real estate agents are reporting that this cut – the first we’ve seen in a year – has buyers splashing their cash like there’s no tomorrow.

“It’s pretty exciting news and what we’ve noticed is an immediate spike in both email, SMS, phone inquiry, participation, open for inspections, the very next day,” said Sweeney agent Darren Dean, who sold 2/60-66 Southampton Street in Footscray at auction for $520,000.

But not all buyers are mirroring this level of excitement. Dana, who is looking to buy her first home, said although lower interest rates would allow her a bit more flexibility, she would still be cautious and keep the long-term picture in mind.

“I think a lot of people will try to get into the market at this point in time and take advantage of the low interest rates,” she said.

“Looking in the long-term, [rates] can always rise so it’s something that people have to be aware of.”

She’s looking for a home within 10km of Melbourne’s CBD, but is finding herself priced out of the market under current conditions.

“Pretty much all of the auctions we’ve been going to have been within that 10 kilometre radius, and they have all been going $150,000 above the reserve price, so it’s just been really hard.”

Caitlin Graham, the successful bidder for the Southampton Street property, said her decision to buy wasn’t driven by the rate cut.

“I think when you’re looking to buy a first house you just take what you can get.”

Finder.com.au has reported that Victorian mortgage holders will find their repayments dropping by almost $700 a year on average thanks to the effect that the cut will have on borrowing rates. That’s certainly a saving not to be sniffed at!

It’ll probably be a couple of months before we see exactly how the market has responded, says Buyer’s agent Karen Price, but she expects the rate cut to drive demand.

“It will affect the market in that there will be more buyers coming into the market and more investors.”