For homeowners across the country, a small shift may be on the horizon—one that could provide a breath of relief.
While economic forecasts often shift, recent signals are stirring cautious optimism. Could the cost of living be easing at last?
What’s behind the change?
The Commonwealth Bank (CBA) has updated its forecast for the Reserve Bank of Australia’s (RBA) next interest rate decisions.
In a move that may provide timely relief, the bank now anticipates not one, but two 0.25 per cent cuts—expected in July and August.
This shift follows newly released data showing headline inflation eased to 2.1 per cent over the year to May, down from 2.4 per cent in the previous month.
The trimmed mean inflation—an important measure used by the RBA—also declined to 2.4 per cent, its lowest level since November 2021.
CBA’s senior economist, Belinda Allen, noted that these figures have given the RBA a clearer pathway.
‘Today’s monthly CPI print capped off a flow of data that should provide comfort to the RBA that a swifter return of the cash rate to neutral is both manageable and needed,’ she said.
CBA now expects a 0.25 per cent cut in July, followed by another in August. This is earlier than their previous forecast, which had the first cut in August.
If these predictions hold, the cash rate would fall to 3.35 per cent—a level last seen at the beginning of the current tightening cycle.
What does this mean for your mortgage?
For an Australian with a $600,000 mortgage and 25 years left to repay, two rate cuts could lower monthly repayments by approximately $178.
This equates to tangible savings each month—something many households would welcome after juggling increased costs across the board.
Financial markets appear to agree, with traders pricing in an 88 per cent chance of a rate cut in July.
Some analysts, such as economist and Yahoo Finance contributor Stephen Koukoulas, have even floated the possibility of a larger 0.50 per cent cut, depending on how quickly inflation continues to drop.
Why is the RBA considering cuts now?
The RBA’s primary goal is to keep inflation within the 2-3 per cent target range.
Now that inflation is below the midpoint and continuing to ease, there are growing calls to avoid making monetary policy too restrictive, which could hinder economic growth.
KPMG’s chief economist, Brendan Rynne, believes a 0.25 per cent cut is ‘warranted given the continued weakness in the private sector of the Australian economy’.
He also argues that such a move is unlikely to reignite inflation, given the current economic landscape.
Oxford Economics Australia’s Ivy Yu described the RBA as being ‘tantalisingly close’ to winning the fight against inflation, saying there is ‘no need to wait’ before cutting rates.
Will all banks follow suit?
CBA and NAB are both forecasting a July cut, while Westpac and ANZ remain more conservative, pointing to August instead.
ANZ economist Madeline Dunk referred to the July decision as a ‘close call’, noting ongoing global economic uncertainties.
Still, the broader weight of evidence appears to be tipping the scale toward earlier intervention.
What should you do now?
If you are currently managing a mortgage, now is a sensible time to review your home loan arrangements.
Even if your bank does not pass on the full rate cut straight away, you may benefit from comparing offers or contacting your lender to discuss options.
For those on fixed rates set to expire, monitoring the RBA’s next steps could help you prepare for what comes next.
Looking ahead
Nothing is guaranteed until the RBA makes its formal decision. The central bank will assess inflation, employment trends, and global influences before making a move.
While two rate cuts in quick succession are increasingly likely, further cuts may not come until late 2025 or even early 2026, depending on how the economy unfolds.
Your say
As cost-of-living pressures continue to affect Australians, this potential change in rates could provide meaningful relief.
Are you feeling the strain of rising repayments? Would a rate cut bring real financial relief to your household? Or are you concerned that lowering rates too soon might fuel another rise in inflation?
Share your perspective in the comments below—we want to hear from all sides of the conversation.
Also read: How banks are responding to Reserve Bank decision to cut interest rates
It might mean some relief to mortgage holders but for those that depend on income from interest we are severely disadvantaged.
The problem has occurred due to the Reserve lowering interest rates to .1% and people taking out mortgages they could afford based on their repayments.
The interest paid on investments was a measly .5% and savers disadvantaged.
In reality interest rates for borrowers should be around 7.5% and savers around 5%.
Thankyou,customers are no longer the priority for the banks.
It’s all about shareholder value.
As banks are now mainly monopolies and the boards are paid on results. the economic 101 prevails and rarely does a bank board know the wishes of the average punter.
Fees are shameful .
Cheers.
I am one of those people who are torn between keeping the rates high and reducing the rates. Why, because I am a Part Pensioner with a Mortgage, and I want the rates & CPI high for my Pension Income, but want them Low to reduce my Mortgage repayments, and be able to pat it off quickly !!