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Daily Mail
21-05-2025
- Business
- Daily Mail
Get ready for a mega rate cut: RBA boss gives hope to millions of borrowers - but it's not all good news
Australian home borrowers can look forward to a super-sized interest rate cut as the Reserve Bank admits it is alert to the possibility of a recession. The Reserve Bank on Tuesday cut interest rates by 25 basis points, taking the cash rate back to 3.85 per cent for the first time since June 2023. This also marked the second cut for 2025, with inflation now back within the RBA's two to three per cent target for the first time in four years. But Reserve Bank Governor Michele Bullock said a bigger 50 basis point cut was considered on Tuesday, which would have saved an average borrower $200 on monthly repayments. 'First of all, it was a consensus decision. What the board discussed was two options: hold or lower,' she told reporters in Sydney. 'There was a bit of a discussion about hold and that was, sort of, put aside pretty quickly. 'The discussion then was about a cut and how big and there was a discussion about 50 and 25.' Borrowers haven't had a 50 basis point rate cut since May 2012, following the end of the mining boom, with the RBA easing rates by smaller amounts during Covid in 2020. Another 50 basis point rate cut, on top of Tuesday's relief, would save a borrower with an average $660,000 mortgage another $209 on their monthly repayments. The RBA's latest rate cut will see standard variable rates among the Big Four banks fall under six per cent. A half a percentage point cut at the Reserve Bank's next meeting in July would see the cash rate fall to 3.35 per cent for the first time since March 2023, and see online-only mortgage rate fall close to the 5 per cent level. But Ms Bullock also had some not so welcome news for Aussies. She said the RBA monetary policy board was worried about the prospect of a recession in the next two years, as Donald Trump's tariffs hurt global growth and caused Australia's economy to shrink for two consecutive quarters. 'If you look at our scenario analysis, it does suggest that in a really bad outcome, there could possibly be a recession, yes, but that's in the very extreme circumstance,' she said. 'At the moment, we're not looking at that, we need to be alert.' The Reserve Bank is expecting sluggish economic growth to continue until at least mid-2027. Australia's economy was only expected to grow by 1.8 per cent during 2024-25, The 2.2 per cent growth pace forecast for 2027 is still well below the long-run, three-decade average of 3 per cent. The futures market is expecting the RBA cash rate to fall to 3.1 per cent by the end of 2025, for the first time since February 2023, which would imply another 75 basis points of relief from the Reserve Bank. More rate cuts are likely to see another boom in house prices, with immigration still at high levels. But Ms Bullock said the effect of rate cuts on house prices wasn't her chief concern, even though it will lock more young people out of the housing market. 'I understand that people are really concerned about housing prices,' she said. 'Our focus has to be on inflation and if the right thing to do in terms of employment and inflation is to lower interest rates, I think we have to accept what that might imply for housing prices because, as I said earlier, the issue for housing is supply, demand and if we start thinking about – 'Well, do we lower interest rates because of housing prices?' – we're going to take our eye off the ball which is inflation and employment and I don't think that would be the right thing to do.' The RBA chief said housing supply wasn't her key responsibility. 'So, I acknowledge some people are worried that as interest rates come down, housing prices will rise but other policies have really got to step up here and address what is a housing shortage,' she said.
Daily Mail
12-05-2025
- Business
- Daily Mail
BREAKING NEWS The good news for Aussie home borrowers - but there is a catch
Australian home borrowers can now get a much lower fixed mortgage rate with ANZ the latest to slash charges. ANZ on Friday slashed two-year fixed rates by 35 basis points to 5.39 per cent - the lowest among Australia's Big Four banks. The move was made ahead of the Reserve Bank's May 20 meeting, with financial markets broadly expecting another rate cut next week. Canstar data insights director Sally Tindall said the banks were trying to lure in new customers before the next rate cut. 'The bank has one eye on the possibility of cash rate cuts, potentially as soon as 20 May, and another on locking new customers in, using a relatively competitive fixed rate as the hook,' she said. While ANZ has the lowest fixed rate among the Big Four banks, Bank of Queensland has an even lower two-year fixed rate of 4.99 per cent. 'A mortgage rate starting with a "four" is a crucial threshold psychologically that could prompt some borrowers to give up their seat on the variable rate rollercoaster,' she said. 'However, by doing so they would be giving up the potential for further cuts in the fixed-rate term.' The 30-day interbank futures market is expecting the Reserve Bank to cut interest rates by another 100 basis points by the end of 2025, from 4.1 per cent now to 3.1 per cent for the first time since February 2023. The headline and underlying measures of inflation are both below the RBA's two to three per cent target for the first time since 2021. A 25 basis point RBA rate cut on May 20 would take the cash rate down to 3.85 per cent for the first time since June 2023.
News.com.au
10-05-2025
- Business
- News.com.au
Possible interest rate relief for Australians
Competition between the big four banks could see Australians benefiting from lower interest rates. ANZ has undercut the other big four, slashing its fixed rates to five-point-three-nine per cent for two years. It follows NAB who a month ago began offering the lowest 3 to 5-year fixed rates.
