Will the RBA cut cash rates? What homeowners need to know.

Homeowners across Australia are eagerly awaiting a potential cash rate cut from the Reserve Bank of Australia (RBA), which has remained steady at 4.35% since November 2023. With interest rates in other countries, like the US, Canada, New Zealand, and the UK, starting to drop, many are hopeful that the RBA will soon follow suit.

Will the RBA cut rates soon?

Despite some optimism following a 0.50% rate cut by the US Federal Reserve last month, the RBA has maintained its restrictive monetary policy for the time being. Economists are divided on the timing of a potential cash rate cut, with some predicting it could occur later this year, while most anticipate changes won't happen until early 2025.

Current inflation trends

Inflation in Australia is showing signs of improvement, with the annual rate falling to 2.7% in August—its lowest level in three years. This decline, down from 3.5% in July, is a positive indicator for potential rate cuts. However, RBA Governor Michele Bullock emphasizes that the Board needs to see sustained inflation reduction before making any decisions about lowering interest rates.

Insights from Australia’s Big Four banks

Australia’s Big Four banks have varying predictions regarding the timing of a cash rate cut:

• Commonwealth Bank (CBA): Optimistic about a 0.25% cut in December 2024, pushed back from November due to recent employment growth.
• NAB: Forecasts a cut in February 2025, with a decrease to 4.1%, followed by quarterly cuts until reaching 3.1% in early 2026.
• Westpac: Expects no change until February, with four anticipated 0.25% cuts throughout 2025.
• ANZ: Agrees that the RBA will likely start its easing cycle in February 2025.

What this means for homeowners

For homeowners, a cash rate cut could result in significant savings on mortgage repayments. If lenders pass on a 0.25% rate reduction:

• On a $600,000 mortgage, monthly repayments could decrease by $92, lowering them to $3,907.
• On a $750,000 mortgage, borrowers might save approximately $114 monthly.

Ready to save on your home loan? Contact us today!

With a potential cash rate cut on the horizon, now is an ideal time to evaluate your home loan options. Our team of experts is here to help you understand how refinancing could benefit you and explore features like offset accounts or redraw facilities.

Call us now at 1300 780 440 or book an appointment to discuss your situation.