A surprising number of Australians are still holding out hope for a Reserve Bank interest rate cut, even as economists warn the cash rate is set to stay on hold.
A new money.com.au consumer survey found that 37 per cent of Aussie homeowners believe the RBA will deliver a cut at today’s meeting, defying the widespread commentary that the cash rate will remain steady at 3.60 per cent.
Millennials were revealed as the most optimistic group, with almost half (47 per cent) expecting a cut, followed by Gen X (40 per cent) and Gen Z (40 per cent).
Baby Boomers were the least likely to share the same optimism, with just 27 per cent predicting relief.
The findings suggest a gap between consumer sentiment and the broader economic consensus. Most major banks and market analysts have forecast the central bank will keep rates steady, with the next cut not likely until November.
Money.com.au finance expert Fi Ahlstrom said the results highlight the level of financial pressure Australians are under.
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Michele Bullock is expected to announce a cash rate hold on Tuesday but some borrowers are still hopeful.
“It shows just how stretched people are. Many are still pinning their hopes on a rate cut even though the Big Four Banks and financial markets have all but ruled one out for September and there may be none for the rest of 2025,” she said.
“In many ways, it’s a sign of quiet desperation. A lot of homeowners were counting on extra repayment relief before Christmas, and many households are now having tough conversations about how to manage their finances for the rest of the year.
“The RBA has repeatedly stressed its cautious approach and its focus on keeping a lid on inflation.
“It isn’t going to cut rates just because of public pressure, so households may need to plan for higher repayments to stick around longer than they’d hoped.”
Rate relief saving households hundreds – but much of it is going back into mortgages
While the cash rate has remained steady since August, the three cuts earlier this year in February, May, and August have started to tally up in borrowers’ bank accounts.
Canstar.com.au analysis shows that an owner-occupier with a $600,000 mortgage at the start of the cuts has seen their minimum monthly repayments drop by an estimated $272 this year. For someone with a $1 million mortgage, the relief is around $453 per month.
However, data from CBA released on Monday shows just 11 per cent of its eligible customers chose to drop their repayments to the minimum following the August cut.
Source: Canstar.com.au.
Canstar.com.au modelling highlights the flip side of keeping repayments the same: an owner-occupier with a $600,000 mortgage and 25 years remaining at the start of the cuts, who kept their monthly repayments unchanged, would now be contributing an extra $272 per month above the minimum amount required. Over the long term, maintaining this higher repayment could potentially save them $76,536 in interest charges and see them repay their mortgage 3 years and 3 months early.
What’s a good rate now?
With the cash rate likely on hold, borrowers seeking rate relief or wanting to get ahead on their debt reduction should be on the lookout for a competitive rate.
Canstar.com.au lists the lowest variable rate for owner-occupiers at 4.99 per cent, which is reserved for first home buyers.
Those refinancing may be eligible for rates as low as 5.08 per cent.
Investors could be in a position to secure a variable rate as low as 5.24 per cent for principal and interest repayments or 5.39 per cent for interest-only.
CPI results put question mark over a November cut
Last week’s ABS monthly CPI indicator results, which saw annual headline inflation clock in at 3.0 per cent and trimmed mean inflation at 2.6 per cent, was a big enough jolt for NAB to adjust its cash rate forecast, shifting the next cut out by six months to May 2026.
CBA, Westpac, and ANZ all still expect a cash rate cut in November, though each acknowledges it might not materialise at this meeting.
If the RBA does cut the cash rate in November, an owner-occupier with a $600,000 mortgage and 25 years remaining would see their minimum monthly repayments drop by a further $87. With three cuts already in effect, the total drop across February, May, August, and a potential November cut would be $359, assuming banks pass this next cut on in full to their variable customers.
Canstar.com.au data insights director, Sally Tindall warned mortgage holders should not bank on a cut.
“Thankfully, the three rate cuts are already translating into real savings for borrowers, tallying up to an estimated $272 a month in relief for a typical $600,000 mortgage. That’s a decent chunk of money that is already making a difference to household budgets,” she said.
“It’s astounding to see that so many eligible borrowers aren’t pocketing this relief into their bank account but rather, reinvesting it into their mortgage instead.
“By keeping their repayments unchanged, they’re effectively turning each RBA cut into an extra mortgage repayment, which, if kept up for the remainder of their loan, could see them save thousands.”
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