Huge Australian bank FALLS interest rates – here’s what you need to know

A major bank will begin cutting fixed rates in a sign that major lenders expect big rate cuts in 2025.

Macquarie Bank is cutting its two-year fixed rate by 20 basis points to 5.39 per cent on Thursday, down from 5.59 per cent for owner-occupier borrowers with a 30 per cent mortgage deposit.

This is now Australia’s lowest fixed rate and the 30-day interbank futures market expects the Reserve Bank of Australia to cut rates four times in 2025.

Macquarie Bank’s rate is much lower than the Commonwealth Bank’s equivalent 6.29 per cent fixed rate for those paying principal and interest.

While RBA Governor Michele Bullock has ruled out pre-Christmas easing (from an existing 12-year high of 4.35 per cent), the futures market expects her board to cut rates by 100 basis points on next year.

This would take the RBA cash rate to 3.35 per cent for the first time since March 2023.

Expectations of big rate cuts mean banks are now offering lower fixed rates than floating rates.

Macquarie Bank’s variable rate is higher at 6.14 per cent, and its Macquarie Group parent company does not expect the RBA’s first rate cut until March 2025.

NAB, ANZ and Westpac expect the rate cut to begin in February next year, while Commonwealth Bank, Australia’s largest property lender, now expects a rate cut in December.

Headline inflation in August fell to 2.7 per cent, putting it within the RBA’s 2 to 3 per cent target for the first time since August 2021, when Sydney and Melbourne were still in lockdown.