After a prolonged period of high interest rates at 4.35 per cent in Australia, mortgage holders are looking for relief in 2025. Economists anticipate that the Reserve Bank of Australia (RBA) will begin reducing the cash rate midway through the year, although forecasts vary; Commonwealth Bank predicts a 0.25 per cent cut as early as February, while others suggest waiting until May for any reductions.
RBA Governor Michele Bullock has refrained from giving a specific timeline for potential cuts. The consensus among the major banks ranges from two to five cuts in 2025, leading to diverse projections for the end-of-year interest rates. If CBA and Westpac’s predictions are realised, rates could drop to 3.35 per cent by Christmas, while ANZ forecasts only two cuts, resulting in a cash rate of 3.85 per cent. NAB is more optimistic, suggesting five reductions might occur, with rates reaching as low as 3.1 per cent.
The anticipated changes may significantly impact household finances. For an average home loan of approximately $640,998, a 0.25 per cent rate change translates to a monthly saving of $144. Therefore, five rate cuts could yield substantial yearly savings, beneficial for mortgage holders seeking relief.