Experts forecast extended RBA easing cycle as cost pressures persist
Australian homeowners could see continued mortgage relief over the coming months, with economists predicting multiple cash rate cuts from the Reserve Bank of Australia (RBA), according to new data from Finder.
In Finder’s latest RBA Cash Rate Survey, the majority of experts forecast not only a rate cut in July, but also further reductions in August and November.
Of the 34 economists and analysts polled, 88% expect the RBA to lower the official cash rate to 3.60% at its meeting next week. A majority (76%) also anticipate a further cut in August, while 52% forecast another reduction in November.
Economists point to easing inflation and weak consumer demand as the main drivers behind the expected easing cycle. Matthew Peter, chief economist at QIC, said he believes the RBA will act this month.
“Underlying inflation is within the RBA's target band and falling, consumer spending is disappointing and the market is expecting a rate cut,” Peter said. “No reasons for the RBA to wait.”
Finder’s analysis suggests borrowers with a $500,000 loan could save $80 per month, or $956 a year, if the expected 0.25% July rate cut is passed on fully. If three cuts take place across 2025 as expected, monthly savings could increase to $134, or $1,613 per year. Those with a $1 million loan could save over $3,200 annually.
“We’ve seen two cash rate cuts already, but homeowners are chomping at the bit for more,” said Graham Cooke (pictured), head of consumer research at Finder. “Inflation is continuing to reduce, which means the RBA is likely to cut and the banks will be under a lot of societal pressure to pass on the full rate cut again in July.
“Finder’s Cost of Living Pressure Gauge has dropped a little to 74%, but it’s still borderline extreme. The first bank to hold back some of the cut will be publicly shamed. Even if you get the full decrease, you may be able to give yourself another by switching. If your home loan is over 5.5 after this cut, you’re paying too much.”
Cooke said borrowers should consider keeping repayments at current levels to benefit more in the long run, noting that while mortgage stress is easing, Finder’s Consumer Sentiment Tracker shows that 34% of homeowners are still finding it difficult to meet repayments.
“If you can afford to, don’t lower your repayments just because your rate has dropped,” he said. “Keeping your repayments steady means you’ll chip away at the principal faster, saving thousands of dollars in interest over the life of your loan.”
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