RBA governor Michele Bullock has said further interest rate moves would be determined “meeting by meeting, based on the data”. (Source: Getty/Yahoo Finance)
ANZ has joined Commonwealth Bank and NAB in ruling out further interest rate cuts this year. Economists and markets have been pushing back expectations of further rate relief, after the Reserve Bank of Australia’s (RBA) cut the cash rate three times this year.
ANZ and CBA now expect the next cut won’t come until February 2026, shifting expectations from November. NAB thinks borrowers will have to wait until May next year, while Westpac is still forecasting cuts in November, February and May.
ANZ economists Adelaide Timbrell and Adam Boynton said February was now the “first plausible month for easing”. However, they noted that the RBA board might “wait longer” to be certain inflation was sustainably heading toward the midpoint of its 2 to 3 per cent target band.
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“We remain of the view that a final easing to 3.35 per cent is more likely than not, although the most likely scenarios are one or no cuts instead of one versus two or more,” they said.
ANZ now expects the upcoming trimmed mean inflation to come in at 0.9 per cent for the quarter. This would see the annual inflation rate rise to 2.8 per cent, up from 2.7 per cent in the June quarter.
While Westpac is the only major bank expecting another rate cut this year, chief economist Luci Ellis has warned it is “far from assured”.
Market pricing last week had a November rate cut priced as a 40 per cent change, a drop from 76 per cent two weeks ago.
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In her post-meeting conference, RBA governor Michele Bullock refused to give any hints as to if, or when, further rate cuts would come.
She said interest rate moves would be made “meeting by meeting, based on the data”, with the RBA aiming to get inflation within its target band.
“That could mean a couple more reductions. It might not, I don’t know at this point, and we’ll look at all this again in November,” Bullock said.
With interest rates potentially remaining on hold for the rest of the year, mortgage holders are being urged to take matters into their own hands.
Canstar found the lowest variable rate for owner-occupiers was 4.99 per cent, which is for first-home buyers. Those refinancing may be eligible for rates as low as 5.08 per cent.
Canstar data insights director Sally Tindall said households waiting for the RBA to “swoop in with a cut” could find themselves waiting for a while.
Canstar data insights director Sally Tindall has urged mortgage holders to shop around for a sharper rate. (Source: Supplied) · Source: Supplied
“If you want to get ahead on your mortgage, take matters into your own hands by shopping around for a sharper rate,” she said. “Owner-occupiers paying down their debt might be able to pick up a deal under 5.25 per cent, while investors can aim for under 5.5 per cent, particularly if they’re willing to pay both principal and interest.
“If you’re paying significantly more, it’s time to take action.”
Banks are also throwing in sweeteners for those looking to switch, including lenders offering cash incentives of up to $4,000, frequent flyer points and fee waivers.
“However, with any upfront sweetener, borrowers should remember, free flights and cold hard cash might sound appealing, but the real savings typically come from securing a low interest rate, particularly on larger loans and especially if you’re unlikely to refinance regularly,” Tindall said.
For a borrower with a $600,000 mortgage at the start of the cuts, a potential November rate cut would see their minimum monthly repayments drop by a further $87.
In addition to the February, May and August, this would bring the total drop to $359.
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