Most experts expect RBA to cut rates next Tuesday

Here's something interesting for Aussie homeowners—there’s a growing buzz around a potential interest rate cut from the Reserve Bank of Australia (RBA) next week. If it happens, it could finally bring some much-needed relief for mortgage holders.

The RBA is set to meet on Monday and Tuesday, with the big decision dropping Tuesday afternoon (AEDT). And according to a Finder survey of 37 economic experts, nearly three-quarters (73%) believe the central bank will announce a rate cut.

If the RBA pulls the trigger, we could see the cash rate drop by 25 basis points to 4.1%. That might not sound like much, but for homeowners, it could mean real savings on monthly mortgage repayments.

What the experts are saying

Finder’s head of consumer research, Graham Cooke, says the pressure is on for a rate cut.

“Headline inflation is within the target range, and has been for a while. With trimmed mean inflation falling, this has heaped pressure on the RBA to cut,” Cooke said.

But not everyone is convinced. QUT Adjunct Professor Noel Whittaker believes the RBA will hold off a little longer.

“The problem is inflation in the building industry remains massive, labour shortages are severe, and the job market is still strong—keeping inflationary pressure on the economy,” Whittaker said.

“It’s a sad system when mortgage holders bear the brunt of the fight against inflation.”

On the flip side, AMP’s Shane Oliver is firmly in the rate-cut camp.

“Underlying inflation is falling faster than the RBA expected, and has been running around target for the last six months,” Oliver explained. “Economic activity is a bit weaker than expected, and Trump’s trade war poses more risks to Australian growth than inflation.”

What a rate cut could mean for you

If the RBA cuts the rate and your lender passes on the savings in full, homeowners with the average loan of $641,416 could see their mortgage payments drop from $3,887 to $3,784—a saving of $103 per month.

For those who recently bought a home, the savings could be even bigger.

• Sydney buyers with an average mortgage of $1.13 million could save $145 per month ($1,740 per year).

• Perth buyers with an average loan of $724,679 could save $93 per month ($1,116 per year).

Time to shop around?

Even if rates don’t drop next week, Cooke says it’s the perfect time to review your mortgage.

“If you’re not getting the most competitive rate, why stick with your current lender?” he said. “Call your bank and ask for a better deal. If they can’t help, it might be time to go home loan shopping.”

With more than one in three homeowners (38%) struggling to meet their mortgage payments in January, any relief would be a welcome change. Let’s see what the RBA has in store next Tuesday!