Struggling Aussie borrowers are now universally expected to get a rate cut next month with NAB becoming the last of the Big Four banks to forecast relief soon.
At the start of the year, the Commonwealth Bank was the only lending giant predicting the Reserve Bank would cut the cash rate on February 18, following its first two-day meeting for 2025.
ANZ joined soon after, but surprisingly low inflation data on Wednesday saw Westpac join the club, followed by NAB on Thursday.
A rate cut next month would save an average borrower $100 on monthly mortgage repayments.
NAB chief economist Alan Oster is expecting the RBA to cut the cash rate five times by February 2026, from the existing level of 4.35 per cent.
This would only partially undo the RBA’s 13 increases in 2022 and 2023, but it would take the cash rate back to 3.1 per cent for the first time since February 2023.
Australia’s headline inflation eased to 2.4 per cent in the December quarter – marking the best consumer price index result since March 2021.
‘The fourth quarter CPI confirms that inflation has moderated more quickly than the RBA expected,’ Mr Oster said.
NAB has joined the other big four major banks in predicting the Reserve Bank will cut interest rates early this year
‘This now makes February the most likely starting point for a gradual easing in interest rates.’
A quarter of a percentage point rate cut would see a borrower with an average $600,000 mortgage save $92 on monthly repayments.
Canstar based its calculations on an owner-occupier paying principal and interest on the average variable rate of 6.33 per cent and 25 years remaining on the loan.
Underlying inflation, which the RBA Governor Michele Bullock has previously pointedly said is too high, eased to a three-year low of 3.2 per cent during the same period.
This puts it only marginally above the Reserve Bank’s 2 to 3 per cent target, which the bank is obliged to meet.
The four major banks have also predicted a number of rate cuts this year.
However, there is no uniformity of this with the ANZ expecting the RBA to make just two cash rate cuts, while NAB is predicting a total of five.
The Commonwealth Bank and Westpac are both expecting four rate cuts in 2025, while the futures market is predicting three rate cuts.
Earlier this month Macquarie Bank dropped its one-year fixed rate from 5.85 per cent to 5.69, four weeks before the Reserve Bank’s next cash rate decision on February 18.
Macquarie Bank’s two-year fixed rate decreased from 5.69 to 5.55, and the three-year fixed rate dropped from 5.69 to 5.55.
RBA Governor Michele Bullock has previously said Australia’s underlying inflation rate is too high
