ANZ now forecasts first rate cut in February

ANZ has brought forward its forecast for the first rate cut to take place in February, however, it maintains the view that borrowers will only see two rate cuts in the coming cycle.

The news follows better-than-expected results from November’s monthly CPI Indicator released on Wednesday.

ANZ now joins CBA in expecting the first RBA cash rate cut in February.

NAB and Westpac are both still forecasting the first cut will be in May.

Canstar.com.au analysis shows the reduction in monthly repayments from one cut could be as much as $92 on a $600,000 and 25 years remaining on the loan term.

Source: www.canstar.com.au - 10/01/2025. Based on an owner-occupier paying principal and interest on the RBA average variable rate of 6.33% with 25 years remaining. Assumes RBA cut is 0.25 percentage points.

However, it's likely there will be more than one rate cut in isolation, although just how many cuts there will be is still up for contention.

NAB is expecting the greatest relief for borrowers with five cuts compared to ANZ’s forecast for only two cuts.

If five rate cuts are realised, the drop in monthly repayments could be as high as $441 per month for a borrower with a $600,000 loan and 25 years remaining compared to $182 for the same borrower if only two cuts eventuate.

Source: www.canstar.com.au - 10/01/2025. Based on an owner-occupier paying principal and interest on the RBA average variable rate of 6.33% with 25 years remaining. Assumes each RBA cut is 0.25 percentage points and banks pass cash rate cuts on in full.

Canstar.com.au data insights director, Sally Tindall says:

“A rate cut in February is increasingly likely, however, with over five weeks to go until the next Board meeting and the RBA firmly focused on incoming data, this could change.

All eyes will be on next week’s ABS Labour Force data and the quarterly CPI results released at the end of the month. If core inflation continues along the same trajectory as we saw in the more volatile monthly dataset, then we could well see a rate cut.

The RBA knows just how tough it’s been for people with a mortgage. It wants to deliver rate relief as soon as the data allows.

Just one rate cut could reduce monthly repayments by approximately $92 per month. That’s not exactly in line with winning Lotto, but for some households, even this small amount of relief will help them make ends meet.

The big question is just how many rate cuts the RBA will end up handing out. While NAB is still forecasting a total of five through to mid-next year, ANZ could equally be right with its prediction of just two.

If you’ve got a mortgage, be prepared for every possibility.”

About Sam Alaaeddin With well over a decade's experience in asset and wealth management, Sam is an Elite Wealth Planner at Metropole and leverages his expertise to help clients achieve their wealth management goals. He holds a bachelor’s degree in law and commerce (Finance) and a Diploma in Financial Planning.