A bombshell has just landed for Australian mortgage holders hoping for an early Christmas gift from the Reserve Bank.
NAB, one of the nation’s biggest lenders, has dramatically revised its cash rate forecast, pushing back the highly anticipated first cut until May next year.
If you were banking on a November reprieve, it’s time for a serious rethink.
The major bank’s revised outlook comes hot on the heels of recent higher-than-expected monthly Consumer Price Index data.
Previously, NAB had anticipated two cash rate cuts, with the first slated for November, followed by another in February next year.
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NAB has revised its cash rate forecast, pushing back the timing of the next cut to May next year, on the back of yesterday’s higher-than-expected monthly CPI data.
This sudden shift leaves many borrowers in limbo, as the other three big four banks currently maintain their expectation of a November rate cut.
However, even CBA has acknowledged that such a move is “by no means guaranteed and will be highly dependent on the data flow from here.”
What does this mean for your mortgage?
While a November rate cut from the RBA isn’t entirely off the cards, borrowers should not consider it a certainty.
For those yearning for a reduction in their mortgage repayments, the most reliable path to achieving it lies in proactive measures: either refinancing to a more competitive rate or negotiating a better deal with their current lender.
Analysis from Canstar.com.au paints a compelling picture.
Their estimates suggest that an owner-occupier who hasn’t switched or renegotiated their home loan since the commencement of the 2022 rate hikes could be sitting on a variable rate of approximately 6.36 per cent.
Source: Canstar.com.au.
However, by making the move to a competitive rate of 5.25 per cent or less, a borrower with a $600,000 debt and 25 years remaining on their loan could potentially save more than $12,000 over the next two years.
This significant saving is achievable even after factoring in estimated switching costs of around $1,150.
Canstar.com.au’s data insights director, Sally Tindall, emphasised the gravity of NAB’s updated forecast.
Source: Canstar.com.au.
“NAB has ripped up its prediction for a 2025 rate cut, pushing the timeline out to May next year following yesterday’s higher-than-expected monthly CPI results,” she says.
“This has almost certainly popped any chance of a September cut. The RBA doesn’t put much weight on the monthly data, but these results are difficult to ignore out of hand and the Board isn’t going to take risks with inflation.
“It’s a stark reminder of how quickly forecasts can change. NAB might be right. It also might be wrong, but what this change in forecast is, is a wake-up call that if you want a rate cut before Christmas, you might need to get it yourself.
Ms Tindall added that the announcement serves as a stark reminder of how quickly forecasts can change.
“It is a wake-up call that if you want a rate cut before Christmas, you might need to get it yourself,” she comments.
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