Further savings likely as markets price in July cash rate cut
With the Reserve Bank of Australia (RBA) lowering the cash rate to 3.85% in May, attention is now turning to a potential second cut in July.
Most of the Big Four banks now expect another reduction, which could offer further relief to mortgage holders. Westpac, NAB and Commonwealth Bank all forecast a 25-basis-point cut on July 8.
NAB and CommBank anticipate another cut in August, with NAB also expecting a third move in November. ANZ, meanwhile, predicts its first cut will come in August.
Ahead of the RBA’s next meeting, financial comparison site Mozo has analysed the effect of the May rate cut on monthly repayments. The findings highlight significant savings for borrowers if lenders pass on the full reduction.
For a typical borrower with a $666,000 home loan, a 25-basis-point drop from 6.10% to 5.85% per annum could lower repayments by around $102 per month, or $1,220 annually, according to Mozo.
The biggest savings in dollar terms are expected in New South Wales, Queensland and the Australian Capital Territory.
“For households experiencing mortgage stress, a cut to the cash rate may see their variable rates reduced - which, for some, can’t come soon enough,” said Mozo’s Peter Terlato. “If you’re struggling to service your loan, you might consider calling your lender to negotiate your rate or do your own research to investigate whether refinancing may be a viable option.”
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