Should I fix my loan or choose a variable interest rate? 🤓
Should I fix my loan or choose a variable interest rate? 🤓 Discover the Pros and Cons of fixed and variable interest rates.
Choosing between a fixed or variable interest rate option depends on several important factors, including your current financial situation, overall risk tolerance, and prevailing market conditions. In Australia, the Reserve Bank of Australia (RBA) set the cash rate, or interest rate, at 4.35%. It's speculated that we are at the peak of the interest rate cycle.
So when do the big four banks think rates will go down?
Commonwealth Bank: Early 2025
Commonwealth Bank economists believe that the cash rate may have peaked at its current level of 4.35%. They suggest that the first cut in the rate is likely to occur around February 2025. Furthermore, CommBank currently forecasts that we can anticipate four rate cuts in the upcoming cycle, which could significantly impact borrowers and the broader economy.
ANZ: Early 2025
At this stage in the economic analysis, ANZ economists firmly believe that the cash rate has peaked at its current level of 4.35%. Furthermore, based on their detailed evaluations of projected inflation data, they predict that a reduction in the cash rate will occur when the bank’s board convenes in February 2025. In light of their findings, ANZ currently forecasts that we can expect to see two cuts implemented in the next monetary policy cycle.
NAB: Early 2025
NAB economists have conducted extensive analysis and now predict that the current level of 4.35% will indeed be the cash rate’s peak for now. Initially, they forecasted that the first cut in the cash rate was likely to occur in February of 2025, indicating a shift in economic conditions. In addition, NAB predicts that we may see five cuts in the forthcoming cycle, which could significantly impact consumer and business borrowing costs.
Westpac: Early 2025
Westpac economists predict that the current level of 4.35% will be the peak of the cash rate, suggesting that we might expect the first rate cuts to occur around February 2025. Furthermore, Westpac predicts that we will experience four cuts in the upcoming cycle, which could significantly impact borrowing conditions and financial planning for many individuals and businesses.
If there is an interest rate cut, how much will the RBA Drop Interest rates in 2025?
A recent poll conducted by Reuters reveals that 68% of economists expect a 25 basis point reduction in the cash rate in February 2025. Furthermore, these experts project a cumulative total decrease of 75 basis points by the end of 2025, indicating a shift in monetary policy that could have significant economic implications.
When does the RBA board meet next?
The board of the Reserve Bank of Australia (RBA) has made some adjustments to its meeting schedule for the year 2024. Previously, the board used to convene on the first Tuesday of each month, except January; however, it now meets only eight times throughout the year, with each meeting lasting for two consecutive days. The rationale behind this altered schedule is to provide the board with additional time to consider and evaluate its critical decisions thoroughly. The specific meeting dates for the RBA board in 2024 are as follows:
17–18 February
31 March–1 April
19–20 May
7–8 July
11–12 August
29–30 September
3–4 November
8–9 December
The RBA’s following cash rate announcement is due on Tuesday, February 18, just over a week away. Therefore, we will know more in just over a week.
Here’s a detailed breakdown of the pros and cons of fixing a home loan to a specific interest rate. This information is designed to assist you in making a more informed and thoughtful decision regarding your mortgage options:
Fixed Interest Rate
✅ Pros:
Predictable repayments (easier for budgeting)
Protection from interest rate increases
Good if rates are expected to rise
❌ Cons:
Usually higher than initial variable rates
Less flexibility (may have penalties for early repayment)
May miss out on lower rates if interest rates fall
In this competitive market, some lenders currently offer attractive fixed interest rates below the prevailing variable interest rates, and these favourable rates can be locked in for the next two years. If you would like to learn more about these opportunities and how they could benefit your financial situation, please do not hesitate to book a complimentary 30-minute discovery call with us.
