Major banks align on timing of interest rate movements for the year
Ahead of the Reserve Bank of Australia’s (RBA) upcoming monetary policy meeting next week, the country’s largest banks have adjusted their cash rate projections for the coming months and into next year.
According to financial comparison site Mozo, all four major banks – Westpac, NAB, Commonwealth Bank, and ANZ – now expect further reductions later this year, forecasting additional cash rate cuts in both August and November, after an unexpected rate hold in July. It follows two 25-basis-point reductions from the RBA this year, in May and February.
“Both sticky inflation and, subsequently, the RBA’s decisions defied expectations in 2024, leading many economists to adjust their cash rate cut calls further and further into the future,” said Mozo’s Peter Terlato.
“However, now that the RBA has twice cut the cash rate in 2025, banks and market commentators have reset their forecasts in order to predict the timing of the next possible rate reduction.”
The Big Four banks’ latest forecasts, as of August 6, outline their expectations for cash rate movements into next year.
Market pricing also points to further changes. The ASX 30 Day Interbank Cash Rate Futures, which tracks expectations for RBA moves, indicates a high probability of additional cuts in the coming months.
For borrowers, the timing of these cuts could have a direct impact on mortgage repayments. If lenders pass on a full 25 basis point reduction, the average borrower with a $660,000 loan could save about $100 per month, or $1,195 per year, according to Mozo’s analysis. The largest savings are expected in New South Wales, Queensland, and the Australian Capital Territory.
The shifting outlook is also likely to drive more clients to mortgage brokers, as borrowers seek advice on refinancing or securing better rates ahead of anticipated cuts. Brokers will need to stay up to date on changing forecasts and lender responses to help clients maximise potential savings and remain competitive.
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