How many rate cuts will there be in 2025? Here's what the big four banks have to say

Economists at Australia’s big four banks all believe we will see long-awaited rate cuts in 2025 – so how many cuts has each of the major banks forecast, and how much could you save?

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Economists at Australia’s big four banks all believe we will see long-awaited rate cuts in 2025 – so how many cuts has each of the major banks forecast, and how much could you save?

Since rates started rising in 2022, Aussie home loan borrowers have seen monthly repayments increase with little reprieve, but with recent consumer price index (CPI) figures showing signs of cooling inflation, many are forecasting that long-awaited rate cuts may finally on the horizon in 2025.

Will the RBA cut rates this year?

The Reserve Bank of Australia (RBA) sets the cash rate at regular intervals throughout the year, and banks and lenders pay close attention, raising or lowering their own interest rates in line with the central bank’s decisions.

After holding the cash rate steady at 4.35 for more than a year, there are predictions that the RBA could cut it as soon as February 2025. The bank’s board is due to announce the first rate decision of the year on Tuesday February 18, and Canstar’s data insights director Sally Tindall says that if inflation continues on its current trajectory, borrowers may see some relief in the form of a 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,” says Tindall. “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.”

How many rate cuts will we get in 2025?

While all four of the big banks agree that we are likely to see the RBA cut rates this year, they are split as to how many we will see. National Australia Bank anticipates that we will see five cuts by the middle of 2026, while ANZ is the most bearish, predicting only two.

Based on all the major bank predictions, Canstar research crunched the numbers to find out how much the average variable rate home loan borrower could save in monthly repayments if the anticipated cuts come to pass.

ANZ: two cuts predicted

Economists at ANZ currently predict that we will see just two rate cuts in total by mid 2026, starting with a 25 basis point cut in February. Per Canstar research, this means that monthly repayments on the average $600,000 home loan could drop by $182 by the middle of next year.

Commonwealth Bank: four cuts predicted

Economists at CBA currently predict that we will see four rate cuts in total by mid 2026, starting with a 25 basis point cut in February. Per Canstar research, this means that monthly repayments on the average $600,000 home loan could drop by $358 by the middle of next year.

National Australia Bank: five cuts predicted

Economists at NAB currently predict that we will see five rate cuts in total by mid 2026, starting with a 25 basis point cut in May. Per Canstar research, this means that monthly repayments on the average $600,000 home loan could drop by $441 by the middle of next year.

Westpac: four cuts predicted

Economists at Westpac currently predict that we will see four rate cuts in total by mid 2026, starting with a 25 basis point cut in May. Per Canstar research, this means that monthly repayments on the average $600,000 home loan could drop by $357 by the middle of next year.