Rate war brewing: 11 lenders slash variable rates despite near-certain RBA pause

A growing list of lenders have cut at least one variable home loan rate since the last cash rate hike, but only for new customers.

Rate tracking by Canstar shows while all lenders in the database have now passed on the May RBA rate hike in full, 11 have also cut select variable rates in the past six weeks in a bid to bring new business in the door.

This includes ING, BOQ, Community First, and Queensland Country Bank.

As a result, there are now 40 lenders offering at least one variable rate under 6%, following the May RBA hike (see the full list at end).

Source: Canstar. Notes: Average rates are Canstar estimates of RBA data. Lowest rates based on the Canstar database.

NAB flips its cash rate outlook, tips rate cuts in 2027

NAB revised its cash rate forecast on Tuesday. Previously it expected one more hike. It now expects the RBA to keep the cash rate on hold for the remainder of the year before making three 0.25 percentage point cuts in 2027 taking the cash rate to 3.60%.

The move followed CBA, which shifted its cash rate outlook last month, forecasting two 0.25 rate cuts in May and August next year.

Both banks pointed to tighter financial conditions as a reason for their change in expectations for the cash rate.

Westpac is still expecting two 0.25 cash rate hikes in 2026. It then expects the RBA will shift to rate cuts, but not until 2028.

Impact of another 0.25 cash rate hike in 2026

While the chance of a further cash rate hike this year is reducing on the back of a slowing economy, borrowers should not rule it out.

For someone with a $600,000 mortgage and 25 years remaining at the start of the hikes, a 0.25 percentage point cash rate hike in August, as Westpac predicts, would increase a borrower’s monthly repayments by $92.

Across what would then be four hikes for the year in February, March, May, and potentially August, the total monthly increase would be $364. 

Source: Canstar. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2026 at the RBA avg variable rate. Assumes next rate hike falls in August in line with Westpac’s forecast. Calculations assume banks pass on the hikes the month after. Changes are to minimum repayments.

Competition in the mortgage market is heating back up

Canstar's Data Insights Director, Sally Tindall, says, “Eleven lenders have taken the knife to new customer rates in the last six weeks in a bid to coax new business in the door.”

“While existing customers will naturally be a bit miffed by such moves, what this tells us is that competition in the mortgage market is heating back up and there are discounts to be had for those willing to play ball.

“The RBA is set to pull the handbrake on the cash rate next week, and while the conversation has shifted to when the first cut might arrive, the reality is we’re still a long way from the central bank shifting it in reverse.

“NAB’s dramatic forecast reversal is the latest reminder that the economic outlook remains highly uncertain. Just weeks ago it was predicting another hike as early as June, whereas now it’s forecasting three cuts by the end of next year.

“While the prospect of another cash rate hike this year is fading, households can’t completely rule it out. If it materialises, a borrower with a $600,000 mortgage would be paying around $364 more each month than they were at the start of the year.

“Use the expected pause next week to do a health check on your mortgage. If your rate isn’t competitive, now is the time to make some noise. 

“There are still 40 lenders offering at least one variable rate below 6 per cent, but you might have to turn yourself into a new customer to benefit.”

Source: Canstar. Rates are for owner-occupiers paying principal and interest. Excludes green loans and introductory rates.