Although the US Federal Reserve made its first interest rate cut in four years last week, Australian mortgage holders shouldn't get too excited the RBA will follow.

The RBA has long held the line that Australia is in a different position than other developed economies where interest rates have been falling for some months.

Interest rates in other countries have generally been higher than Australia's 4.35% cash rate which has remained in place since November 2023 in a bid to tame inflation.

Since then, the RBA has repeatedly said it will not consider cutting the rate until it sees strong evidence inflation falls back to its target range of 2-3%.

Inflation bogeyman

According to the latest monthly Consumer Price Index (CPI) indicator, the annualised inflation rate came in at 3.5% in the 12 months to July 2024.

However, that figure is widely expected to plunge within the RBA's target range when new CPI data is released on Wednesday - a day after the RBA's cash rate decision.

Commonwealth Bank of Australia economists estimate the August inflation rate will fall to 2.7%, thanks largely to the effect of government energy rebates, general disinflation, and softer wages growth.

However this is a red herring; the RBA has long made it clear temporary cost-of-living rebates are not a major focus when it evaluates underlying price pressures in the economy.

It's likely RBA governor Michele Bullock will reiterate this when she fronts the post-meeting media conference on Tuesday afternoon.

What economists and markets will be hanging on is Ms Bullock's tone which many are expecting will be slightly less hawkish given the generally softer data than the RBA's modelling.

It will also be interesting to see whether Ms Bullock holds firm that another interest rate hike remains on the table.

So when will interest rates fall?

Until last week, CBA economists had been forecasting the first cut in the cash rate would come in November but have now changed their expectation to December.

They cited steady employment figures and the RBA's reluctance to lower rates.

But CBA's pre-Christmas rate cut forecast is still ahead of the other big four banks who don't see any movement until 2025.

Here are the latest cash rate forecasts of the big four banks:

Bank First cut expected Number of cuts forecast Rate outcome by end 2025
Commonwealth Bank December 2024 5 3.10%
Westpac February 2025 4 3.35%
NAB May 2025 5 3.10%
ANZ February 2025 3 3.60%

The RBA board is due to deliver its cash rate call at 2:30pm on Tuesday, with its November announcement scheduled for Melbourne Cup Day on 5 November.

The board's final meeting for the year will be 9-10 December.

Advertisement

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
Filters
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
 Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
 Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
 Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Image by Daria Nepriakhina on Unsplash



Ready, Set, Buy!


Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

Download Free
By subscribing you agree to our privacy policy