Westpac joins fellow big four bank NAB in revising its forecast, with NAB predicting the Reserve Bank of Australi (RBA) will cut in either October or November. 

In light of comments made by RBA Deputy Governor Guy Debelle on Tuesday, Westpac chief economist Bill Evans said he expected the central bank to cut. 

"In a speech yesterday the Deputy Governor of the Reserve Bank gave a fairly clear hint that the Board is set to cut the cash rate and other key policy rates at its October Board meeting," Mr Evans said. 

"The theme is likely to be, as we saw in March, a Team Australia moment where the Reserve Bank is directly supporting a bold Federal Budget.

"The prospect of the RBA “sitting back” to assess the Budget, which has been seen as the “norm” in previous years is not appropriate for these unique times." 

Looking to compare low-rate, variable home loans? Below are a handful of low-rate loans in the market.

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.
6.08% 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
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

Addressing the Australian Industry Group yesterday, Dr Debelle said the central bank's support package could be altered to further assist the country out of recession. 

"As the outlook for the Australian economy unfolds, the Board will continue to assess the merits of the range of monetary options to best support the economic recovery." Dr Debelle said.

While NAB economists have forecasted either an October or November rate cut, Mr Evans said there was no reason for the RBA to hold fire until later in the year. 

"It is the medium term projection that the unemployment rate is still likely to be around 7% by the end of 2022 – the Deputy Governor refers to a 'slow grind' – and that the shortfall in demand will be 'a significant break on the recovery'," he said. 

"That outlook is unlikely to change in the November forecast revisions, hence no real case can be made to 'wait'."

Mr Evans said Dr Debelle's speech demonstrated the RBA's concern for the outlook of the economy, and where previous speeches had put emphasis on fiscal stimulus, this speech had focussed mainly on RBA policy.

"He [Dr Debelle] notes that the Bank’s current forecast is that the unemployment rate will still be above 7% by the end of 2022," Mr Evans said.

"So, in the Bank’s current figuring, restoration of the full employment rate (which through wage pressures and the resulting required narrowing of the output gap is significant for achieving an inflation target) is in the far distant future.

"That means that policy needs to be very stimulatory." 

Negative rates a possibility 

Mr Evans noted while Dr Debelle ruled out negative interest rates, the central bank was in the position of potentially having to deal with a negative overnight rate. 

"Banks, which lend at a margin above the overnight rate will still not be exposed to negative lending rates but this process may provide the RBA with a test of its comfort with negative rates," he said. 

Although the official cash rate target currently sits at 0.25%, the RBA's alternative easing measures have pushed the interbank overnight cash rate down to 0.13%.

NAB revises its cash rate forecasts

In light of Dr Debelle's speech, NAB revised their cash rate forecast, predicting either an October or November rate cut. 

While Mr Evans said there was no reason to wait, NAB economists said a November cut may appeal to more people. 

"NAB expects these further easing measures to be announced at either the October or November Board meetings, noting that the October Board meeting is the same day as the Budget, while the November SMP (Statement on Monetary Policy) after the November Board could be an avenue to communicate its messaging to a wider audience," they said.



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