- NAB has cut fixed rate mortgages
A Big Four bank has cut fixed mortgage rates in a sign the Reserve Bank could start cutting rates early next year.
The National Australia Bank has cut two-year fixed rates by 55 basis points to 6.04 per cent.
One-year fixed rates have been cut by 40 basis points to 6.29 percent, while three-year fixed rates have been cut by 10 basis points to 5.89 percent.
Canstar noted that 37 lenders had cut fixed rates over the past month, including Macquarie Bank, which offers a market-leading fixed rate of 5.39 per cent for two to five years.
Australia’s banks now offer fixed mortgage rates that are more competitive than variable rates, and financial markets expect four RBA rate cuts in 2025 that would reduce average mortgage payments by $5,000 a year.
Minutes from the Reserve Bank’s September meeting were also released on Tuesday, hinting that rate cuts are likely in 2025.
“On the other hand, members noted that there were scenarios in which future financial conditions might need to be less restrictive than they currently are,” he said.
RBA Governor Michele Bullock confirmed last month that a rate hike was not considered at the Reserve Bank’s September meeting, making rate cuts in early 2025 more likely.
A major bank has cut fixed mortgage rates in a sign the Reserve Bank could start cutting rates early next year.
Australia’s economic growth pace of 1 per cent is already the weakest since 1991, the year of the recession, when the effects of the pandemic were excluded.
Core inflation of 3.4 per cent is still well above the RBA’s target of 2 to 3 per cent, but Reserve Bank minutes hinted that price pressures could ease at a faster rate than anticipated .
“One such scenario would be if the economy proved to be significantly weaker than expected and this would put more downward pressure on core inflation than expected,” the minutes said.
‘Another scenario would be if inflation turned out to be less persistent than assumed, even without weaker-than-expected activity.
“This could occur, for example, if rent inflation fell more rapidly, falling gasoline or other commodity prices materially reduced companies’ cost bases, or if declines in discretionary spending were passed on materially further. rapidly to the inflation of services.
The Reserve Bank’s 13 interest rate hikes in 2022 and 2023 were the most aggressive since the late 1980s.
But the 30-day interbank futures market sees the cash rate fall from a 12-year high of 4.35 percent to 3.35 percent for the first time since March 2023.
If the RBA were to cut rates four times, as predicted, a borrower with an average mortgage of $636,208 would see their monthly payments fall by $409, or $4,908 a year.
This would occur when monthly payments decreased to $3,609, down from $4,018.