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News.com.au
3 days ago
- Business
- News.com.au
‘Disappointing for customers': Banks announce savings rate cuts
Australia's major banks and financial institutions have cut saving rates in the days following the Reserve Bank moving on interest rates. In unwelcome news for savers, seven financial institutions have this week announced they are reducing savings rates. NAB has moved on two of its savings accounts, reducing the rates on its Reward Saver and iSaver products. Reward Savers will get a new maximum rate of 4.10 per cent, while iSavers will get up to 4.40 per cent for the first four months before the account reverts back to 1.25 per cent. NAB has moved on its savings accounts 10 days ahead of variable mortgage rates. BOQ's Future Saver account, which is available to young adults aged 14-35, has dropped from 5.00 to 4.85 per cent. Macquarie Bank has cut both savings and mortgage rates. Macquarie savers will now get a maximum 4.25 per cent, while those on a transaction account will get 2 per cent going forward. Other banks that have already cut savings rates this week include AMP, Great Southern Bank, ME Bank and Hume Bank. The move on savings accounts follows the Reserve Bank of Australia on Tuesday announcing it had lowered the official cash rate by 25 basis points to 3.60 per cent. Canstar data insights director Sally Tindall says the third RBA rate cut of the year is already hitting savers in the hip pocket. 'We expect more savings rates will fall victim to this latest RBA cut in the weeks ahead; however, banks aren't likely to make a song and dance about them,' she said. Following the RBA's announcement, Commonwealth Bank was the first of the major banks to tell customers it would pass on the rate cut in full to variable rate home loan customers, effective from August 22. Shortly after, Westpac said it was passing on the cut in full to their variable rate customers and savers alike. Westpac savers' interest rates will drop from August 22, reducing the amount they are making off their money, but mortgage holders will have to wait a further four days to get any interest-rate relief. ANZ announced similar terms for borrowers, also decreasing variable rates by 25 basis points effective August 22. CBA and ANZ savings rates are still under review, but Canstar says if history is anything to go by, the banks will cut select savings rates next Friday. NAB will reduce its standard variable home loan rates by 0.25 per cent starting from Monday, August 25.
Globe and Mail
4 days ago
- Business
- Globe and Mail
Macquarie Group Issues $1 Billion Subordinated Notes to Bolster Capital
Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. An announcement from Macquarie Group Limited ( (AU:MQG)) is now available. Macquarie Group Limited and Macquarie Bank Limited have announced the issuance of $US1 billion in subordinated notes, which will serve as Tier 2 Capital for the bank. This move is expected to increase the total liabilities of Macquarie Bank Limited and enhance its capital structure, potentially strengthening its financial position and market competitiveness. The most recent analyst rating on (AU:MQG) stock is a Hold with a A$191.00 price target. To see the full list of analyst forecasts on Macquarie Group Limited stock, see the AU:MQG Stock Forecast page. More about Macquarie Group Limited Macquarie Group Limited is a global financial services organization known for its diverse operations across banking, financial, advisory, investment, and funds management services. The company primarily focuses on providing tailored financial solutions to clients worldwide, leveraging its expertise in infrastructure, energy, and commodities markets. Average Trading Volume: 739,469 Technical Sentiment Signal: Strong Buy Current Market Cap: A$78.03B For detailed information about MQG stock, go to TipRanks' Stock Analysis page.
Yahoo
6 days ago
- Business
- Yahoo
First bank to pass on RBA's interest rate cut to mortgage holders
Macquarie Bank has become the first major lender to reveal it will pass on the Reserve Bank of Australia's (RBA) decision to cut interest rates. The Board revealed on Tuesday afternoon that the cash rate would fall from 3.85 per cent to 3.60 per cent. Just two minutes after the announcement, Macquarie said customers on a variable rate will enjoy a 0.25 per cent reduction in their interest repayments. The move will be effective from August 15, and will bring the bank's new best variable rate to 5.44 per cent. Canstar data insights director Sally Tindall told Yahoo Finance it's a warranted move after many suffered through rising interest rates for years. But she also warned other lenders to jump on the bandwagon as homeowners deserved the relief. "This will be the third cut after 13 rate hikes. It's not time to be hitting the brakes on passing on rate cuts," she Aussie reveals $12,000 mortgage 'tax' costing borrowers ahead of crucial RBA decision Centrelink warning for downsizing Baby Boomers over 'special' retirement rule Kiwi couple move to Australia after 'overwhelming' $20,000 cost to start family mortgage expert, Debbie Hays, echoed this sentiment and called on lenders to let homeowners know sooner rather than later. 'There's greater scrutiny on lenders this time around because borrowers were already expecting relief last month and they didn't get it," she said. "Following the false start in July, all eyes will be on the banks to pass on this rate cut in full and quickly. Not doing so would be a PR nightmare for any lender in the current climate. 'Some lenders even moved early, and cut both variable and fixed rates before the RBA even met, because markets had priced in the decision for some weeks. Given the cut was almost guaranteed, banks have had more time than usual to prepare, so there's little excuse for delay or inaction.'When will the August interest rate cut hit my mortgage repayments? This will be different for each lender. At the time of writing, Commonwealth Bank (CBA), ANZ, NAB, and Westpac haven't revealed if they will follow in the RBA's footsteps with a 0.25 per cent cut to variable rates. If they do pass on the rate cut, the major banks' decisions usually kick in 10 to 14 days after the RBA meeting. Some smaller lenders can act much faster. For example, Athena Home Loans passed on a same-day rate cut following May's interest rate cut announcement. Athena has also passed on the August rate decision to its customers, with the new best variable rate being 5.64 per cent. Ben Perham, head of personal banking at Macquarie Bank, said it was essential to pass on the rate cut as quickly as possible. 'When the RBA last cut the cash rate in May, we proved that the savings could be passed on to homeowners in just three days, instead of the industry average of 12 days," he said. "We were the fastest of the major banks and homeowners loved it, so we're doing it again." What does a third rate cut mean for homeowners? If you have a $600,000 mortgage with 25 years remaining, this 0.25 per cent rate cut will save you roughly $74 per month. When you combine this cut with the ones in February and May, homeowners will be pocketing around $272 per month, or $3,264 per year. Those monthly savings jump up to $453 per month for someone with a home loan of $1 million, and yearly savings of $5,436. Ahead of the August decision, Canstar estimated the new average variable rate for owner-occupier loans would be 5.54 per cent. It added that 5.34 per cent would be the lowest Big Four bank variable rate, and 5.25 per cent and under would be considered an ultra-competitive variable in to access your portfolio
Yahoo
6 days ago
- Business
- Yahoo
RBA interest rate decision: Michele Bullock avoids 'all-out attack' from Aussies with 'unanimous' cut, banks start to pass on savings
Hello and welcome to Yahoo Finance's live coverage of today's interest rate decision from the RBA. Governor Michelle Bullock has cut the interest rate by 25 basis points to 3.6 per cent. Bullock stunned Australia in July after she held the cash rate at 3.85 per cent despite strong inflation data. The notoriously-cautious Bullock risked an "all-out attack on the RBA's legitimacy" if she and the board held the rate at 3.85 per cent, Finder's Graham Cooke had warned. Macquarie Bank became the first Australian bank to announce it would be passing on the RBA's decision to lower interest rates. We'll be bringing you all the reaction to the decision here. Macquarie Bank first to announce a cut Macquarie Bank was the first Australian bank to announce it would be passing on the RBA's decision to lower interest rates. The bank had its announcement out just minutes after the RBA handed down its decision on Monetary Policy. Macquarie Bank revealed will provide a full 0.25 per cent cut to its variable rate. The cut will kick in on August 15. The race is on now to see how the other banks react. Follow on here for all the details. Unanimous decision Last time we had a six-three split on the RBA board. This time around it was a unanimous decision to pass on a cut to borrowers. RBA cuts interest rate OK, there it is. As expected, the RBA has cut the interest rate by 25 basis points to 3.6 per cent. We'll be bringing you analysis of the monetary policy statement shortly. How certain is an interest rate cut? The last time the RBA board met most economists said an interest rate cut was a definite. As you would remember, they were proved wrong. Six board members ended up with the majority vote, with only three wanting to pass on a cut (that means only three to convince this time around). We have more data to give the board confidence that a cut would be prudent but The Motley Fool's chief investment officer Scott Phillips has erred on the side of caution. His justification? 'It's a parlour game', he said. 'Pundits,' as John Kenneth Galbraith once said, 'forecast not because they know, but because they are asked'. Scott said economists is 'at it best when it explains' and 'at its worst when it tries to pretend it can predict.' 'Last time, the market thought the odds were 95%-plus that we'd get a rate cut,' Scott said. 'And what did the RBA do? It held rates steady. 'Oops. 'And today? The implied odds are essentially 100 per cent. 'Now, the market might be right. We'll find out at 2.30pm, today.' The finance expert noted that the RBA has said "essentially nothing' new about interest rates for the last couple of meeting and since then there has been 'weak GDP, strong employment (and blessedly low unemployment) and falling inflation'. Three out of 34 experts from Finder's analysis predicted a cut, with similar justifications, and they could be right. Scott stopped short of making any predictions himself. 'I'm not saying the market will be wrong about today's rates call. 'But I'm not saying that it'll be right. 'What I am saying is that prediction is hard.' One thing is for sure, we will know in 15 minutes. RBA soon to get clearer picture to make rates decision There's been a bit of scrutiny over how the RBA was getting their inflation data and some believe last month's hold was a result of this. The reserve bank has relied heavily on the quarterly CPI data, which was the most comprehensive offering from the Australian Bureau of Statistics. This obviously could hamper the RBA board's judgement with several meetings scheduled between each report. "It is very difficult on four readings a year to get an idea of momentum of inflation," Michele Bullock previously said. Well from November, that will end and the ABS will release comprehensive data monthly. This will bring Australia in line with all but one OECD nation. We're not far off now OK, so we're just over half an hour away from the RBA's cash rate decision. We'll of course be bringing that to you right here, as well as the accompanying monetary policy statement. Then we'll be hearing from Treasurer Jim Chalmers, followed by Michele Bullock who will front media about 3.30pm (AEST). Could the RBA deliver a 50 basis points cut? Well in May, Michele Bullock revealed the RBA board gave good consideration to a supersized 50 basis points cut, before eventually settling on 25 basis points. Bullock did stress nothing was off the table moving forward however, meaning that larger-than-normal cut could come down the track. But then optimism from homeowners took a big hit with last month's hold and now suggestion of a 50 basis points cut has all but vanished. The general consensus from leading economists is it's not really an option today, with the ABC's Business Editor Michael Janda saying the chance of a 50 basis points cut is "virtually zero". But after July's meeting, the RBA certainly keeps us on our toes, so we won't rule it out just yet. Will the big banks pass on an expected rate cut? The Big Four banks were quick to pass on the RBA's interest rate cuts in February and May, but will they be as generous this time around? Canstar data insights director Sally Tindall said she expects the banks will step up after an expected cut today. 'We expect they will pass it on in full,' Tindall told Yahoo Finance. 'They should step up to the plate. This will be the third cut after 13 rate hikes. It's not time to be hitting the brakes on passing on rate cuts.' A borrower with a $600,000 loan with 25 years remaining would see their monthly repayments drop by $90 to $3,699. Tindall said some low cost lenders tended to cut interest rates earlier as they saw the value in getting their announcements out quickly. In May, for example, Athena Home Loans passed on a same day rate cut following May's announcement while the major banks rate cuts are usually effective 10 to 14 days after the announcement. Tindall said the group would be keeping 'an eye on each and every lender' as announcements come through. The one word now synonymous with RBA There's one word that's bound to pop up plenty of times today once we've had the RBA's decision. In the accompanying statement to July's decision, we saw the word uncertainty, or variations of it, five times. In May's statement we saw it eight times, as well as the numerous times it was mentioned in Michele Bullock's press conference. With volatile global policy continuing, namely Donald Trump's ongoing tariff war, don't expect a notoriously-cautious Bullock to ditch her favourite word anytime soon even if a rate cut is delivered. Interest rates drop under 5 per cent Variable rates have dipped into the 4's after Police Credit Union dropped its lowest rate to just 4.99 per cent last month. Canstar data insights director Sally Tindall told Yahoo Finance the move 'puts pressure on some of the other competitors to make that leap', although it will be a 'pretty big leap' for most. 'I don't think many will but a handful of banks or non-banks may choose to join the Police Credit Union in that under 5 per cent club,' she said. If the RBA cuts rates today, Canstar estimates more than 30 lenders will offer at least one variable rate under 5.25 per cent and more than 70 will offer at least one under 5.50 per cent. The new average rate will be 5.54 per cent for existing borrowers and Tindall said borrowers should not be on a rate that was over 5.50 per cent. Fixed rates are already 'firmly' in the '4's, with 18 lenders offering at least one fixed rate under 5 per cent. For the non owners, will you ever get there? Of course there's always plenty of chat about what this means for homeowners but spare a thought for those who don't, as a predicted rate cut will undoubtedly see prices rise once again. In fact, the situation is so bleak for non-owners one third of them don't think they'll ever have their own home. That disturbing discovery comes from Finder, with its Consumer Sentiment Tracker saying 35 per cent of Australians believe they won't ever get beyond renting their home. 'Record prices, steep borrowing costs, and saving for a deposit are locking people out. In many suburbs, even a six-figure salary won't comfortably cover a mortgage," Finder's Graham Cooke said. So if you don't own your own home, do you think you will at some point? Let us know below. The trifecta that paves way for rate cut Yahoo Finance contributor and Aussie economic guru David Koch has broken down the three things he thinks the RBA needed to assess to greenlight a cut after the 'disappointing' July decision. Questions surrounding that data have now been answered which he said has given the RBA a '"trifecta of ticks" to warrant a cut. Check out the Compare the Market economic director's take here. Fixed or variable? The borrowers set to benefit from interest rate cut Mortgage broker Brett Sutton from Two Red Shoes said sentiment has shifted over the last four years when fixed interest rates were incredibly popular - providing borrowers with 'certainty during a period of historically low rates'. He told Yahoo Finance that now the dynamic has shifted. 'Now, the opposite is true. Fixed rates are no longer a "no-brainer" for most borrowers,' Sutton said. 'In recent times, fixed rates were much higher than variable rates, making them unattractive for homeowners. 'Today, while fixed rates have come down and are now much closer to variable rates, they're still not appealing enough to drive a new wave of borrowers to fix.' The Sydney broker said more borrowers were staying on variable rates as they, like the big banks, think the RBA will continue its rate cutting cycle. 'They don't see the value in locking in a rate that's only slightly lower than their current one, when they could potentially benefit from even bigger drops in the future,' he said. So off the back of a surprise hold, and the potential for another in September, is this a good time to fix? That all comes down to your personal circumstances. 'The gap between the best fixed and variable rates is often small, making the decision less about a significant saving and more about peace of mind. For those who value budgeting certainty above all else, a fixed rate might still make sense but for the majority, the bet is on the RBA continuing to ease monetary policy,' Sutton said. If we get a cut today, will the RBA cut again in 2025? There will be three more meetings in 2025 to determine the cash rate and Commonwealth Bank's senior economist Belinda Allen told Yahoo Finance there is one with the greatest potential for another cut: November. The RBA board said there wasn't enough consumer price index (CPI) data to warrant a reduction when it delivered a shock hold in July. However, since then, the Australian Bureau of Statistics (ABS) released a quarterly inflation reading that indicated inflation was under control. Trimmed inflation, the metric that the central bank uses in its interest rate decisions, fell from 2.9 to 2.7 per cent, which puts it in the RBA's target zone of 2-3 per cent. And, everyone is confident we will get an August cut. But this cyclical approach may not bode well for a September reduction. The quarterly data won't be out by then. 'We generally think their cautious approach means they're waiting for the quarterly CPI and a quarterly forecast refresh,' Allen told Yahoo Finance. But, we will have a new set of CPI data before the board meets in November. 'To deviate from that quarterly cadence, it would have to take a real big surprise in the data, as we know they're still a bit reluctant to rely on the monthly CPI,' she said. 'Unless you see, for example, a material lift in the unemployment rate, they'll stick to that once a quarter easing cycle.' Surprise statistic after Aussies plead for cuts Interestingly, while some have needed the extra cash from this year's rate cuts to get by – Commonwealth Bank home buying team general manager Tess Sutherland said just one in 10 of the bank's borrowers had opted to lower their home loan repayments after the May interest rate cut. NAB and ANZ reported similar figures, with NAB noting more than 90 per cent kept their repayments steady after the May cut and ANZ noting 10 per cent had lowered repayments since the February cut. Westpac is the only one of the Big Four banks that automatically drops repayments for customers paying the minimum amount. Others have been happier for the money to eat away at their principal loan amount faster - allowing them to save on interest across the life of their loan. Mozo personal finance expert Rachel Wastell told Yahoo Finance keeping your repayments the same was a great way for borrowers to 'get ahead' on their loan 'If things are tight, using an offset account can still help reduce interest while giving you flexibility if you need access to funds later,' Wastell said. How much will a rate cut today save me? Compare the Market has crunched the numbers and found rate cuts of 25 basis points in February and May would have reduced monthly repayments on a $600,000 loan by around $193. Another cut in August could push that figure to $307 – a reduction of $3,684 over a year. Here's how much you could've saved a month, depending on the size of your loan, if you chose to pocket the cut. How did the RBA board vote last time? While it is of course Governor Michele Bullock who fronts the media and faces the scrutiny of the RBA's decisions, the board as a collective has the final say on matters. And in a first for the RBA following a recent restructuring of operations, it revealed how the board voted when it delivered a shock hold last month. Six board members decided it was right to hold the cash rate at 3.85 per cent while just three said it was time to cut. What are the major banks predicting? Let's just remind ourselves where the Big Four banks stand when it comes to rate cuts in the near future after last meeting's hold. All four believe there'll be a cut today, with CBA and ANZ believing that'll be the penultimate cut of this cycle. But Westpac and NAB believe the RBA will go further in 2026. Take a look at what's predicted below. These experts say a rate cut is no guarantee The Big Four Banks and dozens of experts are all tipping the RBA will cut interest rates today. But not everyone is singing the same tune. Three out of the 34 specialists who spoke with Finder reckon the central bank could actually keep the cash rate on hold at 3.85 per cent. Stella Huangfu, from the University of Sydney, had two reasons for her prediction. 'First, June quarter trimmed mean annual CPI inflation is still 2.7 per cent, which is high within the 2–3 per cent target band and slightly above the RBA's forecast of 2.6 per cent,' she said. 'Second, the RBA has already cut rates twice this year, giving it scope to pause and assess the impact before moving further.' Fresh Economic Thinking's Cameron Murray also backed a hold, but said it was hard to tell which direction the RBA would go, while Jakob B Madsen, from the University of Western Australia thought the economic environment here 'has not changed recently' enough to warrant a cut. How have we fared since the RBA lifted the cash rate from its record low? OK, let's have a look at where we currently stand in terms of the cash rate. The following line chart shows how the rate has moved since the RBA began lifting it from a record-low of 0.1 per cent in the first half of 2022. As you can see we spent all of 2024 at 4.35 per cent, the highest point of this cycle. Now, we're on the way down and if lowered by 25 basis points today, we'd reach a cash rate last seen in April 2023. Macquarie Bank first to announce a cut Macquarie Bank was the first Australian bank to announce it would be passing on the RBA's decision to lower interest rates. The bank had its announcement out just minutes after the RBA handed down its decision on Monetary Policy. Macquarie Bank revealed will provide a full 0.25 per cent cut to its variable rate. The cut will kick in on August 15. The race is on now to see how the other banks react. Follow on here for all the details. Macquarie Bank was the first Australian bank to announce it would be passing on the RBA's decision to lower interest rates. The bank had its announcement out just minutes after the RBA handed down its decision on Monetary Policy. Macquarie Bank revealed will provide a full 0.25 per cent cut to its variable rate. The cut will kick in on August 15. The race is on now to see how the other banks react. Follow on here for all the details. Unanimous decision Last time we had a six-three split on the RBA board. This time around it was a unanimous decision to pass on a cut to borrowers. Last time we had a six-three split on the RBA board. This time around it was a unanimous decision to pass on a cut to borrowers. RBA cuts interest rate OK, there it is. As expected, the RBA has cut the interest rate by 25 basis points to 3.6 per cent. We'll be bringing you analysis of the monetary policy statement shortly. OK, there it is. As expected, the RBA has cut the interest rate by 25 basis points to 3.6 per cent. We'll be bringing you analysis of the monetary policy statement shortly. How certain is an interest rate cut? The last time the RBA board met most economists said an interest rate cut was a definite. As you would remember, they were proved wrong. Six board members ended up with the majority vote, with only three wanting to pass on a cut (that means only three to convince this time around). We have more data to give the board confidence that a cut would be prudent but The Motley Fool's chief investment officer Scott Phillips has erred on the side of caution. His justification? 'It's a parlour game', he said. 'Pundits,' as John Kenneth Galbraith once said, 'forecast not because they know, but because they are asked'. Scott said economists is 'at it best when it explains' and 'at its worst when it tries to pretend it can predict.' 'Last time, the market thought the odds were 95%-plus that we'd get a rate cut,' Scott said. 'And what did the RBA do? It held rates steady. 'Oops. 'And today? The implied odds are essentially 100 per cent. 'Now, the market might be right. We'll find out at 2.30pm, today.' The finance expert noted that the RBA has said "essentially nothing' new about interest rates for the last couple of meeting and since then there has been 'weak GDP, strong employment (and blessedly low unemployment) and falling inflation'. Three out of 34 experts from Finder's analysis predicted a cut, with similar justifications, and they could be right. Scott stopped short of making any predictions himself. 'I'm not saying the market will be wrong about today's rates call. 'But I'm not saying that it'll be right. 'What I am saying is that prediction is hard.' One thing is for sure, we will know in 15 minutes. The last time the RBA board met most economists said an interest rate cut was a definite. As you would remember, they were proved wrong. Six board members ended up with the majority vote, with only three wanting to pass on a cut (that means only three to convince this time around). We have more data to give the board confidence that a cut would be prudent but The Motley Fool's chief investment officer Scott Phillips has erred on the side of caution. His justification? 'It's a parlour game', he said. 'Pundits,' as John Kenneth Galbraith once said, 'forecast not because they know, but because they are asked'. Scott said economists is 'at it best when it explains' and 'at its worst when it tries to pretend it can predict.' 'Last time, the market thought the odds were 95%-plus that we'd get a rate cut,' Scott said. 'And what did the RBA do? It held rates steady. 'Oops. 'And today? The implied odds are essentially 100 per cent. 'Now, the market might be right. We'll find out at 2.30pm, today.' The finance expert noted that the RBA has said "essentially nothing' new about interest rates for the last couple of meeting and since then there has been 'weak GDP, strong employment (and blessedly low unemployment) and falling inflation'. Three out of 34 experts from Finder's analysis predicted a cut, with similar justifications, and they could be right. Scott stopped short of making any predictions himself. 'I'm not saying the market will be wrong about today's rates call. 'But I'm not saying that it'll be right. 'What I am saying is that prediction is hard.' One thing is for sure, we will know in 15 minutes. RBA soon to get clearer picture to make rates decision There's been a bit of scrutiny over how the RBA was getting their inflation data and some believe last month's hold was a result of this. The reserve bank has relied heavily on the quarterly CPI data, which was the most comprehensive offering from the Australian Bureau of Statistics. This obviously could hamper the RBA board's judgement with several meetings scheduled between each report. "It is very difficult on four readings a year to get an idea of momentum of inflation," Michele Bullock previously said. Well from November, that will end and the ABS will release comprehensive data monthly. This will bring Australia in line with all but one OECD nation. There's been a bit of scrutiny over how the RBA was getting their inflation data and some believe last month's hold was a result of this. The reserve bank has relied heavily on the quarterly CPI data, which was the most comprehensive offering from the Australian Bureau of Statistics. This obviously could hamper the RBA board's judgement with several meetings scheduled between each report. "It is very difficult on four readings a year to get an idea of momentum of inflation," Michele Bullock previously said. Well from November, that will end and the ABS will release comprehensive data monthly. This will bring Australia in line with all but one OECD nation. We're not far off now OK, so we're just over half an hour away from the RBA's cash rate decision. We'll of course be bringing that to you right here, as well as the accompanying monetary policy statement. Then we'll be hearing from Treasurer Jim Chalmers, followed by Michele Bullock who will front media about 3.30pm (AEST). OK, so we're just over half an hour away from the RBA's cash rate decision. We'll of course be bringing that to you right here, as well as the accompanying monetary policy statement. Then we'll be hearing from Treasurer Jim Chalmers, followed by Michele Bullock who will front media about 3.30pm (AEST). Could the RBA deliver a 50 basis points cut? Well in May, Michele Bullock revealed the RBA board gave good consideration to a supersized 50 basis points cut, before eventually settling on 25 basis points. Bullock did stress nothing was off the table moving forward however, meaning that larger-than-normal cut could come down the track. But then optimism from homeowners took a big hit with last month's hold and now suggestion of a 50 basis points cut has all but vanished. The general consensus from leading economists is it's not really an option today, with the ABC's Business Editor Michael Janda saying the chance of a 50 basis points cut is "virtually zero". But after July's meeting, the RBA certainly keeps us on our toes, so we won't rule it out just yet. Well in May, Michele Bullock revealed the RBA board gave good consideration to a supersized 50 basis points cut, before eventually settling on 25 basis points. Bullock did stress nothing was off the table moving forward however, meaning that larger-than-normal cut could come down the track. But then optimism from homeowners took a big hit with last month's hold and now suggestion of a 50 basis points cut has all but vanished. The general consensus from leading economists is it's not really an option today, with the ABC's Business Editor Michael Janda saying the chance of a 50 basis points cut is "virtually zero". But after July's meeting, the RBA certainly keeps us on our toes, so we won't rule it out just yet. Will the big banks pass on an expected rate cut? The Big Four banks were quick to pass on the RBA's interest rate cuts in February and May, but will they be as generous this time around? Canstar data insights director Sally Tindall said she expects the banks will step up after an expected cut today. 'We expect they will pass it on in full,' Tindall told Yahoo Finance. 'They should step up to the plate. This will be the third cut after 13 rate hikes. It's not time to be hitting the brakes on passing on rate cuts.' A borrower with a $600,000 loan with 25 years remaining would see their monthly repayments drop by $90 to $3,699. Tindall said some low cost lenders tended to cut interest rates earlier as they saw the value in getting their announcements out quickly. In May, for example, Athena Home Loans passed on a same day rate cut following May's announcement while the major banks rate cuts are usually effective 10 to 14 days after the announcement. Tindall said the group would be keeping 'an eye on each and every lender' as announcements come through. The Big Four banks were quick to pass on the RBA's interest rate cuts in February and May, but will they be as generous this time around? Canstar data insights director Sally Tindall said she expects the banks will step up after an expected cut today. 'We expect they will pass it on in full,' Tindall told Yahoo Finance. 'They should step up to the plate. This will be the third cut after 13 rate hikes. It's not time to be hitting the brakes on passing on rate cuts.' A borrower with a $600,000 loan with 25 years remaining would see their monthly repayments drop by $90 to $3,699. Tindall said some low cost lenders tended to cut interest rates earlier as they saw the value in getting their announcements out quickly. In May, for example, Athena Home Loans passed on a same day rate cut following May's announcement while the major banks rate cuts are usually effective 10 to 14 days after the announcement. Tindall said the group would be keeping 'an eye on each and every lender' as announcements come through. The one word now synonymous with RBA There's one word that's bound to pop up plenty of times today once we've had the RBA's decision. In the accompanying statement to July's decision, we saw the word uncertainty, or variations of it, five times. In May's statement we saw it eight times, as well as the numerous times it was mentioned in Michele Bullock's press conference. With volatile global policy continuing, namely Donald Trump's ongoing tariff war, don't expect a notoriously-cautious Bullock to ditch her favourite word anytime soon even if a rate cut is delivered. There's one word that's bound to pop up plenty of times today once we've had the RBA's decision. In the accompanying statement to July's decision, we saw the word uncertainty, or variations of it, five times. In May's statement we saw it eight times, as well as the numerous times it was mentioned in Michele Bullock's press conference. With volatile global policy continuing, namely Donald Trump's ongoing tariff war, don't expect a notoriously-cautious Bullock to ditch her favourite word anytime soon even if a rate cut is delivered. Interest rates drop under 5 per cent Variable rates have dipped into the 4's after Police Credit Union dropped its lowest rate to just 4.99 per cent last month. Canstar data insights director Sally Tindall told Yahoo Finance the move 'puts pressure on some of the other competitors to make that leap', although it will be a 'pretty big leap' for most. 'I don't think many will but a handful of banks or non-banks may choose to join the Police Credit Union in that under 5 per cent club,' she said. If the RBA cuts rates today, Canstar estimates more than 30 lenders will offer at least one variable rate under 5.25 per cent and more than 70 will offer at least one under 5.50 per cent. The new average rate will be 5.54 per cent for existing borrowers and Tindall said borrowers should not be on a rate that was over 5.50 per cent. Fixed rates are already 'firmly' in the '4's, with 18 lenders offering at least one fixed rate under 5 per cent. Variable rates have dipped into the 4's after Police Credit Union dropped its lowest rate to just 4.99 per cent last month. Canstar data insights director Sally Tindall told Yahoo Finance the move 'puts pressure on some of the other competitors to make that leap', although it will be a 'pretty big leap' for most. 'I don't think many will but a handful of banks or non-banks may choose to join the Police Credit Union in that under 5 per cent club,' she said. If the RBA cuts rates today, Canstar estimates more than 30 lenders will offer at least one variable rate under 5.25 per cent and more than 70 will offer at least one under 5.50 per cent. The new average rate will be 5.54 per cent for existing borrowers and Tindall said borrowers should not be on a rate that was over 5.50 per cent. Fixed rates are already 'firmly' in the '4's, with 18 lenders offering at least one fixed rate under 5 per cent. For the non owners, will you ever get there? Of course there's always plenty of chat about what this means for homeowners but spare a thought for those who don't, as a predicted rate cut will undoubtedly see prices rise once again. In fact, the situation is so bleak for non-owners one third of them don't think they'll ever have their own home. That disturbing discovery comes from Finder, with its Consumer Sentiment Tracker saying 35 per cent of Australians believe they won't ever get beyond renting their home. 'Record prices, steep borrowing costs, and saving for a deposit are locking people out. In many suburbs, even a six-figure salary won't comfortably cover a mortgage," Finder's Graham Cooke said. So if you don't own your own home, do you think you will at some point? Let us know below. Of course there's always plenty of chat about what this means for homeowners but spare a thought for those who don't, as a predicted rate cut will undoubtedly see prices rise once again. In fact, the situation is so bleak for non-owners one third of them don't think they'll ever have their own home. That disturbing discovery comes from Finder, with its Consumer Sentiment Tracker saying 35 per cent of Australians believe they won't ever get beyond renting their home. 'Record prices, steep borrowing costs, and saving for a deposit are locking people out. In many suburbs, even a six-figure salary won't comfortably cover a mortgage," Finder's Graham Cooke said. So if you don't own your own home, do you think you will at some point? Let us know below. The trifecta that paves way for rate cut Yahoo Finance contributor and Aussie economic guru David Koch has broken down the three things he thinks the RBA needed to assess to greenlight a cut after the 'disappointing' July decision. Questions surrounding that data have now been answered which he said has given the RBA a '"trifecta of ticks" to warrant a cut. Check out the Compare the Market economic director's take here. Yahoo Finance contributor and Aussie economic guru David Koch has broken down the three things he thinks the RBA needed to assess to greenlight a cut after the 'disappointing' July decision. Questions surrounding that data have now been answered which he said has given the RBA a '"trifecta of ticks" to warrant a cut. Check out the Compare the Market economic director's take here. Fixed or variable? The borrowers set to benefit from interest rate cut Mortgage broker Brett Sutton from Two Red Shoes said sentiment has shifted over the last four years when fixed interest rates were incredibly popular - providing borrowers with 'certainty during a period of historically low rates'. He told Yahoo Finance that now the dynamic has shifted. 'Now, the opposite is true. Fixed rates are no longer a "no-brainer" for most borrowers,' Sutton said. 'In recent times, fixed rates were much higher than variable rates, making them unattractive for homeowners. 'Today, while fixed rates have come down and are now much closer to variable rates, they're still not appealing enough to drive a new wave of borrowers to fix.' The Sydney broker said more borrowers were staying on variable rates as they, like the big banks, think the RBA will continue its rate cutting cycle. 'They don't see the value in locking in a rate that's only slightly lower than their current one, when they could potentially benefit from even bigger drops in the future,' he said. So off the back of a surprise hold, and the potential for another in September, is this a good time to fix? That all comes down to your personal circumstances. 'The gap between the best fixed and variable rates is often small, making the decision less about a significant saving and more about peace of mind. For those who value budgeting certainty above all else, a fixed rate might still make sense but for the majority, the bet is on the RBA continuing to ease monetary policy,' Sutton said. Mortgage broker Brett Sutton from Two Red Shoes said sentiment has shifted over the last four years when fixed interest rates were incredibly popular - providing borrowers with 'certainty during a period of historically low rates'. He told Yahoo Finance that now the dynamic has shifted. 'Now, the opposite is true. Fixed rates are no longer a "no-brainer" for most borrowers,' Sutton said. 'In recent times, fixed rates were much higher than variable rates, making them unattractive for homeowners. 'Today, while fixed rates have come down and are now much closer to variable rates, they're still not appealing enough to drive a new wave of borrowers to fix.' The Sydney broker said more borrowers were staying on variable rates as they, like the big banks, think the RBA will continue its rate cutting cycle. 'They don't see the value in locking in a rate that's only slightly lower than their current one, when they could potentially benefit from even bigger drops in the future,' he said. So off the back of a surprise hold, and the potential for another in September, is this a good time to fix? That all comes down to your personal circumstances. 'The gap between the best fixed and variable rates is often small, making the decision less about a significant saving and more about peace of mind. For those who value budgeting certainty above all else, a fixed rate might still make sense but for the majority, the bet is on the RBA continuing to ease monetary policy,' Sutton said. If we get a cut today, will the RBA cut again in 2025? There will be three more meetings in 2025 to determine the cash rate and Commonwealth Bank's senior economist Belinda Allen told Yahoo Finance there is one with the greatest potential for another cut: November. The RBA board said there wasn't enough consumer price index (CPI) data to warrant a reduction when it delivered a shock hold in July. However, since then, the Australian Bureau of Statistics (ABS) released a quarterly inflation reading that indicated inflation was under control. Trimmed inflation, the metric that the central bank uses in its interest rate decisions, fell from 2.9 to 2.7 per cent, which puts it in the RBA's target zone of 2-3 per cent. And, everyone is confident we will get an August cut. But this cyclical approach may not bode well for a September reduction. The quarterly data won't be out by then. 'We generally think their cautious approach means they're waiting for the quarterly CPI and a quarterly forecast refresh,' Allen told Yahoo Finance. But, we will have a new set of CPI data before the board meets in November. 'To deviate from that quarterly cadence, it would have to take a real big surprise in the data, as we know they're still a bit reluctant to rely on the monthly CPI,' she said. 'Unless you see, for example, a material lift in the unemployment rate, they'll stick to that once a quarter easing cycle.' There will be three more meetings in 2025 to determine the cash rate and Commonwealth Bank's senior economist Belinda Allen told Yahoo Finance there is one with the greatest potential for another cut: November. The RBA board said there wasn't enough consumer price index (CPI) data to warrant a reduction when it delivered a shock hold in July. However, since then, the Australian Bureau of Statistics (ABS) released a quarterly inflation reading that indicated inflation was under control. Trimmed inflation, the metric that the central bank uses in its interest rate decisions, fell from 2.9 to 2.7 per cent, which puts it in the RBA's target zone of 2-3 per cent. And, everyone is confident we will get an August cut. But this cyclical approach may not bode well for a September reduction. The quarterly data won't be out by then. 'We generally think their cautious approach means they're waiting for the quarterly CPI and a quarterly forecast refresh,' Allen told Yahoo Finance. But, we will have a new set of CPI data before the board meets in November. 'To deviate from that quarterly cadence, it would have to take a real big surprise in the data, as we know they're still a bit reluctant to rely on the monthly CPI,' she said. 'Unless you see, for example, a material lift in the unemployment rate, they'll stick to that once a quarter easing cycle.' Surprise statistic after Aussies plead for cuts Interestingly, while some have needed the extra cash from this year's rate cuts to get by – Commonwealth Bank home buying team general manager Tess Sutherland said just one in 10 of the bank's borrowers had opted to lower their home loan repayments after the May interest rate cut. NAB and ANZ reported similar figures, with NAB noting more than 90 per cent kept their repayments steady after the May cut and ANZ noting 10 per cent had lowered repayments since the February cut. Westpac is the only one of the Big Four banks that automatically drops repayments for customers paying the minimum amount. Others have been happier for the money to eat away at their principal loan amount faster - allowing them to save on interest across the life of their loan. Mozo personal finance expert Rachel Wastell told Yahoo Finance keeping your repayments the same was a great way for borrowers to 'get ahead' on their loan 'If things are tight, using an offset account can still help reduce interest while giving you flexibility if you need access to funds later,' Wastell said. Interestingly, while some have needed the extra cash from this year's rate cuts to get by – Commonwealth Bank home buying team general manager Tess Sutherland said just one in 10 of the bank's borrowers had opted to lower their home loan repayments after the May interest rate cut. NAB and ANZ reported similar figures, with NAB noting more than 90 per cent kept their repayments steady after the May cut and ANZ noting 10 per cent had lowered repayments since the February cut. Westpac is the only one of the Big Four banks that automatically drops repayments for customers paying the minimum amount. Others have been happier for the money to eat away at their principal loan amount faster - allowing them to save on interest across the life of their loan. Mozo personal finance expert Rachel Wastell told Yahoo Finance keeping your repayments the same was a great way for borrowers to 'get ahead' on their loan 'If things are tight, using an offset account can still help reduce interest while giving you flexibility if you need access to funds later,' Wastell said. How much will a rate cut today save me? Compare the Market has crunched the numbers and found rate cuts of 25 basis points in February and May would have reduced monthly repayments on a $600,000 loan by around $193. Another cut in August could push that figure to $307 – a reduction of $3,684 over a year. Here's how much you could've saved a month, depending on the size of your loan, if you chose to pocket the cut. Compare the Market has crunched the numbers and found rate cuts of 25 basis points in February and May would have reduced monthly repayments on a $600,000 loan by around $193. Another cut in August could push that figure to $307 – a reduction of $3,684 over a year. Here's how much you could've saved a month, depending on the size of your loan, if you chose to pocket the cut. How did the RBA board vote last time? While it is of course Governor Michele Bullock who fronts the media and faces the scrutiny of the RBA's decisions, the board as a collective has the final say on matters. And in a first for the RBA following a recent restructuring of operations, it revealed how the board voted when it delivered a shock hold last month. Six board members decided it was right to hold the cash rate at 3.85 per cent while just three said it was time to cut. While it is of course Governor Michele Bullock who fronts the media and faces the scrutiny of the RBA's decisions, the board as a collective has the final say on matters. And in a first for the RBA following a recent restructuring of operations, it revealed how the board voted when it delivered a shock hold last month. Six board members decided it was right to hold the cash rate at 3.85 per cent while just three said it was time to cut. What are the major banks predicting? Let's just remind ourselves where the Big Four banks stand when it comes to rate cuts in the near future after last meeting's hold. All four believe there'll be a cut today, with CBA and ANZ believing that'll be the penultimate cut of this cycle. But Westpac and NAB believe the RBA will go further in 2026. Take a look at what's predicted below. Let's just remind ourselves where the Big Four banks stand when it comes to rate cuts in the near future after last meeting's hold. All four believe there'll be a cut today, with CBA and ANZ believing that'll be the penultimate cut of this cycle. But Westpac and NAB believe the RBA will go further in 2026. Take a look at what's predicted below. These experts say a rate cut is no guarantee The Big Four Banks and dozens of experts are all tipping the RBA will cut interest rates today. But not everyone is singing the same tune. Three out of the 34 specialists who spoke with Finder reckon the central bank could actually keep the cash rate on hold at 3.85 per cent. Stella Huangfu, from the University of Sydney, had two reasons for her prediction. 'First, June quarter trimmed mean annual CPI inflation is still 2.7 per cent, which is high within the 2–3 per cent target band and slightly above the RBA's forecast of 2.6 per cent,' she said. 'Second, the RBA has already cut rates twice this year, giving it scope to pause and assess the impact before moving further.' Fresh Economic Thinking's Cameron Murray also backed a hold, but said it was hard to tell which direction the RBA would go, while Jakob B Madsen, from the University of Western Australia thought the economic environment here 'has not changed recently' enough to warrant a cut. The Big Four Banks and dozens of experts are all tipping the RBA will cut interest rates today. But not everyone is singing the same tune. Three out of the 34 specialists who spoke with Finder reckon the central bank could actually keep the cash rate on hold at 3.85 per cent. Stella Huangfu, from the University of Sydney, had two reasons for her prediction. 'First, June quarter trimmed mean annual CPI inflation is still 2.7 per cent, which is high within the 2–3 per cent target band and slightly above the RBA's forecast of 2.6 per cent,' she said. 'Second, the RBA has already cut rates twice this year, giving it scope to pause and assess the impact before moving further.' Fresh Economic Thinking's Cameron Murray also backed a hold, but said it was hard to tell which direction the RBA would go, while Jakob B Madsen, from the University of Western Australia thought the economic environment here 'has not changed recently' enough to warrant a cut. How have we fared since the RBA lifted the cash rate from its record low? OK, let's have a look at where we currently stand in terms of the cash rate. The following line chart shows how the rate has moved since the RBA began lifting it from a record-low of 0.1 per cent in the first half of 2022. As you can see we spent all of 2024 at 4.35 per cent, the highest point of this cycle. Now, we're on the way down and if lowered by 25 basis points today, we'd reach a cash rate last seen in April 2023. OK, let's have a look at where we currently stand in terms of the cash rate. The following line chart shows how the rate has moved since the RBA began lifting it from a record-low of 0.1 per cent in the first half of 2022. As you can see we spent all of 2024 at 4.35 per cent, the highest point of this cycle. Now, we're on the way down and if lowered by 25 basis points today, we'd reach a cash rate last seen in April 2023. Sign in to access your portfolio
Daily Telegraph
08-08-2025
- Business
- Daily Telegraph
Double rate cut expected as more banks drop into 4pc range
Two more banks have dropped interest rates into the 4pc range on Friday with one delivering a shock new low, as the market prices in a surprise double rate cut come Tuesday. Canstar's database showed Bank of Queensland slashed its lowest fixed rate to 4.89 per cent for two years – the new lowest standard home loan rate in the market. data insights director Sally Tindall said there weare 18 lenders offering at least one fixed rate under 5 per cent now on their database, but just one lender – Police Credit Union – with a variable rate under this mark. 'This rate cut, which is for owner-occupiers with a 20 per cent deposit, is additional confirmation lenders are pricing in further RBA cash rate cuts as they compete for new business with headline grabbing rates,' Canstar said. ME Bank was the second major lender to drop interest rates below the 5 per cent mark Friday, with its new 4.99 per cent two-year fixed rate now live, and Macquarie Bank moved below the 5pc range earlier this week. Compare the Market economic director David Koch expected more banks to follow 'with a four in front' in the days and weeks ahead. RELATED: 7 banks slash rates as RBA showdown looms large Shock as lenders slash rates to lowest level in 2 years The moves come as the market priced in a shock double rate cut come Tuesday with ASX's RBA Rate Indicator flagging market expectations of a cash rate cut from 3.85 per cent to 3.35 per cent. 'The ASX 30 Day Interbank Cash Rate Futures August 2025 contract was trading at 96.315, indicating a 51 per cent expectation of an interest rate decrease to 3.35 per cent at the next RBA Board meeting,' it said – indicating a 0.5 percentage point cut to the cash rate. Mr Koch said a 0.50pc rate cut 'could represent a saving of $210 on monthly repayments – or $2,520 over a year – for someone with an average $660,000 loan' or about $193 a month for those on $600,000 to as much as $322 a month for a $1m loan. 'Some banks have pre-emptively reduced their fixed rates in anticipation of the August decision. Depending on their appetite to attract new customers, and where they think rates are headed, they may readjust them again.' The ASX market pricing of a 0.5pp cut goes further than expectations of all four of Australia's biggest banks, with CBA, NAB, Westpac and ANZ all picking another 0.25pp cut on Tuesday. MORE: Aus landlord's epic council battle ends in demolition Explosive reform of negative gearing, capital gains perks However, if the RBA cuts the cash rate on Tuesday, more lenders could drop variable rates under this mark, Mr Koch said. Rate cuts of 0.25pc in February and May 2025 would have reduced monthly repayments on a $600,000 loan by around $193. Another 0.25pp cut in August could push that figure to $307 – a reduction of $3,684 over a year, he said. The Finder RBA Cash Rate Survey, released Friday, has 91 per cent of 34 experts and economists surveyed expected a single rate cut come Tuesday, bringing it to 3.60 per cent. Queensland Investment Corporation's Matthew Peter's reasoning was ''falling inflation, softening labour market – no remaining hurdles for a rate cut' while Oxford Economics Australia's Sean Langcake said 'we've seen more evidence that the labour market is softening. Moreover, the Q2 CPI did not contain any red flags around core inflation pressures. This paves the way for an August rate cut'. MORE: All the tax write offs Aussies can claim ATO's dragnet: Millions of side hustles face shock tax bill Graham Cooke, head of consumer research at Finder, said if banks pass this on in full, an Aussie homeowner with a $500k mortgage will save $2,884 per year compared to what they were paying at the start of the year before the RBA started cutting the cash rate. 'If the RBA doesn't cut next week, they are risking an all-out attack on their legitimacy in the eyes of many homeowners. Last month's decision to hold shocked the market, and we are now seeing a 90 per cent plus certainty of a cut. With inflation well within the target range, there is no reason to hold.' He warned 'banks will be under intense scrutiny to pass on a cut in full'. 'If your rate's sitting above 5.5% after this change, you're probably paying more than you need to,' Mr Cooke said. Mr Koch said 'it's a competitive loan market so I expect – if the cash rate drops – most banks will pass on the discount in full. There's growing speculation we could see multiple rate cuts before the end of the year, so I don't think banks will hesitate to move on this one.' MORE: Cash-strap student turns $40k to 38 homes Govt pays $3.3m for unliveable derelict house MORE REAL ESTATE NEWS
