Multiple banks in Australia have begun cutting home loan interest rates even as markets expect the Reserve Bank of Australia to keep the cash rate unchanged at its meeting next week. The move suggests lenders are trying to attract new borrowers ahead of any shift in official policy, while competition in the mortgage market appears to be intensifying.
Since the RBA last raised the cash rate in May, 11 lenders have reduced at least one variable home loan rate for new customers. Among them are ING and BOQ, two lenders that have become more active in competing for fresh business. Canstar data insights director Sally Tindall said banks had taken the knife to new customer rates to win business, adding that borrowers willing to negotiate could find discounts as competition heats up again.
The cuts have widened the number of lenders offering variable home loan rates below 6 per cent. There are now 40 lenders in that category, including Westpac and ING. While that gives borrowers more options, Tindall said the RBA is still expected to hold the cash rate next week and that a cut is still some time away. She said the discussion has shifted from whether the next move will be up to when the first cut might arrive, but that the central bank is still a long way from reversing course.
Fixed home loan rates have moved in a less clear direction. Some lenders, including ANZ and Macquarie Bank, cut selected fixed rates last week. However, the broader fixed-rate market is still trending higher, with Westpac and NAB among the banks that have recently lifted rates on some products.
Forecasts from major banks are also shifting. NAB has dropped its earlier view that the RBA would deliver one more hike in August. It now believes the cash rate has already peaked at 4.35 per cent and expects the first rate cut in the second quarter of next year, with the cash rate ending 2025 at 3.6 per cent. NAB chief economist Sally Auld said the next move is more likely to be down, but the timing remains uncertain.
The Commonwealth Bank is even more cautious, predicting the RBA will keep rates on hold until early 2027. It is currently forecasting cuts in May and August next year.
Overall, the latest moves suggest the mortgage market is becoming more competitive even before the RBA begins easing policy. For borrowers, that could mean more scope to shop around and negotiate, especially on variable rates, while fixed-rate offers remain mixed and less predictable.
