The Reserve Bank has delivered its August cash rate decision, with millions watching closely for signs of relief.
The Reserve Bank of Australia has confirmed a widely anticipated interest rate cut, trimming the cash rate by 25 basis points to 3.6 per cent.
For a borrower with a $600,000 mortgage, the cut is expected to reduce monthly repayments by about $89.
Canstar projects lenders will pass the cut on to customers, with mortgage rates expected to settle at:
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5.54 per cent for the new typical owner-occupier variable rate.
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5.34 per cent for the lowest big four variable rate, if the cut is fully passed on.
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5.25 per cent for an “ultra-competitive” variable rate across 30 lenders.
What comes next
While the big four banks all forecast an August cut, they remain split on the extent of further cuts.
Westpac is the most optimistic, predicting four cuts over this cycle, announced in August, November, February and May, taking the cash rate down to 2.85 per cent.
NAB has forecast three cuts, with 25-basis-point reductions in August, November and February, lowering the rate to 3.10 per cent.
Commonwealth Bank and ANZ are more conservative, expecting cuts in August and November, ending the cycle at 3.35 per cent.
Today’s decision follows the RBA’s surprise move in July to hold the cash rate at 3.85 per cent.
Just weeks after the hold announcement, June’s labour force data revealed the unemployment rate had risen from 4.1 per cent to 4.3 per cent, adding weight to calls for monetary easing.
What it means for the housing market
Domain estimates the cut will lift borrowing power by $4,000 for single earners of $50,000, and by $49,000 for double-income households earning $400,000.
Meanwhile, the Commonwealth Bank expects property prices to keep climbing, forecasting national growth of 6 per cent in 2025 and 4 per cent in 2026.
Smaller capitals are tipped to lead the way, with Brisbane, Perth and Adelaide projected to rise by 8 per cent, 7 per cent and 6 per cent, respectively.
However, CBA chief economist Luke Yeaman urged caution when predicting property price growth.
“The housing market is picking up thanks to rate cuts, but there are headwinds, so we’re not expecting as big a lift as we’ve seen in the past,” he said.
“Even though incomes are improving, a shallow rate cutting cycle, slower migration, and stretched housing affordability mean prices probably won’t rise as much over the next year.”
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