Major Banks Predict RBA Rate Cut: Homeowners Could Save Up to $154 Per Month!

The Reserve Bank of Australia (RBA) is preparing for a crucial meeting in February 2025, and many economists predict a possible cut in interest rates.

This decision could provide much-needed financial relief for Australian homeowners, especially those struggling with high mortgage repayments. With inflation slowing down, experts believe the RBA might reduce the official cash rate, making borrowing more affordable.

In this article, we will explore the expected rate cut, how it could impact home loan repayments, and what it means for the Australian economy.

Why Is an RBA Rate Cut Expected?

Financial experts and major banks have been closely monitoring inflation and economic growth. Recent data from the Australian Bureau of Statistics (ABS) shows that inflation has dropped significantly.

In the December 2024 quarter, inflation rose by just 0.2%, bringing the annual rate down to 2.4%. This marks a major slowdown compared to previous years when inflation was much higher.

Since the RBA aims to keep inflation within a target range of 2% to 3%, the latest figures suggest that inflation is under control.

As a result, economists from major banks such as Commonwealth Bank, Westpac, NAB, and ANZ believe the RBA may reduce interest rates to support economic growth and ease financial pressure on borrowers.

When Will the RBA Announce Its Decision?

The RBA board is scheduled to meet on February 17 and 18, 2025. The final decision on the cash rate will be officially announced on February 18 at 2:30 PM.

Following the announcement, RBA Governor Michele Bullock will hold a press conference to explain the decision and its potential impact on the economy.

If the RBA cuts rates in February, it could signal the beginning of a broader easing cycle, with more rate reductions expected later in the year. However, if the rate cut does not happen in February, the next possible opportunity for a reduction will be in April 2025.

How Much Could Homeowners Save?

If the RBA cuts the interest rate by 0.25%, it could reduce mortgage repayments for many Australians. According to financial experts at Canstar, the potential savings per month could be:

• $600,000 loan → Save $92 per month
• $750,000 loan → Save $115 per month
• $1,000,000 loan → Save $154 per month

These savings may seem small, but they can add up over time, helping homeowners manage household expenses more effectively.

However, it’s important to note that banks are not required to pass on the full rate cut to borrowers. A review of past rate cuts by Canstar found that major banks often do not pass on the full reduction to customers.

For example, in the last decade, Commonwealth Bank, NAB, and ANZ fully passed on only four out of ten RBA rate cuts, while Westpac passed on just two.

How Many Rate Cuts Could Happen in 2025?

While a 0.25% rate cut is expected in February, experts predict that more rate cuts could follow later in the year. Here’s what major banks are forecasting for 2025:

• Commonwealth Bank: 4 rate cuts
• Westpac: 4 rate cuts
• NAB: 5 rate cuts
• ANZ: 2 rate cuts

If multiple rate cuts occur, mortgage repayments could decrease even further. According to Canstar, if the RBA makes four rate cuts in total, monthly savings could increase to:

• $600,000 loan → Save $359 per month
• $750,000 loan → Save $449 per month
• $1,000,000 loan → Save $599 per month

These reductions could ease financial pressure on many Australian households, especially those struggling with high living costs.

Will the Banks Pass on the Full Rate Cut?

Although a rate cut would be beneficial for borrowers, banks are not legally required to pass on the full reduction. Banks often make independent decisions on how much of the cut to apply to home loan rates.

However, public pressure could play a role in their decision. With the cost-of-living crisis affecting many Australians, banks may face increased scrutiny if they choose not to pass on the full rate cut.

When Is the Next Chance for a Rate Cut?

If the RBA does not lower interest rates in February, the next possible opportunity for a cut will be in April 2025. The RBA board will meet eight times this year, with the following scheduled meetings:

• March 31 – April 1
• May 19 – 20
• July 7 – 8
• August 11 – 12
• September 29 – 30
• November 3 – 4
• December 8 – 9

Many financial experts believe that the February meeting is a crucial one. If the RBA decides to cut rates now, it could indicate the start of a broader cycle of monetary easing in 2025.

Conclusion

The upcoming RBA meeting on February 17-18 is a key event for Australian homeowners. If a 0.25% rate cut is implemented, borrowers could save up to $154 per month on a $1 million loan. More rate cuts may follow throughout 2025, leading to further savings.

However, it remains uncertain whether banks will fully pass on the reduction. Homeowners should stay informed and be prepared for changes in mortgage rates in the coming months.

This article has been carefully fact-checked by our editorial team to ensure accuracy and eliminate any misleading information. We are committed to maintaining the highest standards of integrity in our content.