Ever wondered why your first impression of a price, salary, or investment opportunity sticks so stubbornly in your mind? This isn’t just a quirk of memory—it’s a powerful psychological effect called anchoring and adjustment. In 2025, as Australians face a volatile housing market, fluctuating interest rates, and a deluge of financial products, understanding this bias is more critical than ever.
What Is Anchoring and Adjustment?
Anchoring occurs when we rely too heavily on the first piece of information—an ‘anchor’—when making decisions. Adjustment refers to the (often insufficient) tweaks we make from that starting point. In personal finance, this can influence everything from what you think is a good deal on a mortgage to how much you’re willing to invest in superannuation.
For example, if a real estate agent tells you the ‘average’ home in your area sells for $1.1 million, that figure becomes your mental anchor. Even if you later see evidence that prices are falling, your perception of value remains tethered to that original number. The adjustment is rarely enough to overcome the anchor’s influence.
How Anchoring Shapes Australians’ Money Moves in 2025
The impact of anchoring and adjustment is everywhere, but it’s especially pronounced in this year’s financial landscape:
- Property Market Decisions: With CoreLogic reporting a 2025 median house price of $934,000 in Sydney, buyers and sellers are using this as a reference point—even as regional prices diverge and interest rates hover near 10-year highs.
- Interest Rate Expectations: After the RBA’s recent pause at 4.35%, many borrowers still anchor to the ultra-low rates of the pandemic era, underestimating how higher rates should affect their refinancing or homebuying decisions.
- Superannuation Contributions: The rise in the super guarantee to 12% in July 2025 is being used as a mental benchmark for ‘enough’ retirement savings, even if individual needs vary widely.
Retailers and financial service providers know this bias well. Limited-time offers, ‘was/now’ pricing, and even initial loan rate quotes are designed to anchor your expectations in their favour.
Spotting—and Outsmarting—Anchoring in Your Own Finances
Recognising anchoring bias is the first step to making smarter financial decisions. Here’s how to fight back:
- Compare Multiple Sources: Don’t accept the first price, rate, or salary offered. Use comparison tools and independent data to reset your mental anchor.
- Be Wary of ‘Reference Prices’: When shopping or negotiating, be aware that the first number you see is likely designed to set your expectations, not reflect true value.
- Reframe Decisions with Fresh Data: For big choices—like refinancing your mortgage or choosing an investment—look at current trends, not just past figures. For example, recent APRA guidelines for responsible lending may mean your borrowing capacity is lower than your 2022 pre-approval.
- Pause and Reflect: The more important the decision, the more you should challenge your own assumptions. Ask: “Would this still feel like a good deal if I hadn’t seen the first number?”
Australian regulators are also working to counteract anchoring. ASIC’s 2025 consumer protection guidance requires clearer disclosure of fees and comparison rates, aiming to reduce the impact of misleading anchors in financial product advertising.
The Bottom Line: Awareness Is Your Best Asset
Anchoring and adjustment bias isn’t just a theory—it’s quietly shaping the way Australians borrow, invest, and spend every day. By understanding how anchors work and actively seeking out better information, you can make more confident, clear-eyed decisions in a fast-changing financial world.
