All eyes on the RBA cash rate as hopes run high
RBA meetings happen 8 times a year, but they're very rarely as exciting as this month's.
Borrowers are waiting with crossed fingers ahead of the RBA cash rate meeting next week, particularly after hearing suggestions of a bumper rate cut coming their way.
The Reserve Bank of Australia (RBA) will be meeting on Tuesday 20th May. There are high expectations that we'll see the second rate cut of this year.
88% of Finder's panel of economists believe there'll be a cut. But that means there are still a few who expect the rate won't move at all.
It's not just the economists preparing for a rate cut. Getting ahead of the meeting, some banks have already started cutting their rates.
Excited for a rate cut?
Check out home loan interest rates ahead of the RBA meeting.
What are the experts saying?
Of the 88% forecasting a rate cut, the majority expect it will be a 25 basis point cut. Only 2 panellists have predicted a bumper 50 basis point cut.
The 50 basis point cut prediction is in line with major bank NAB's forecast. But for the most part, the expectation is the lower number.
There's still 12% that are expecting a hold. And actually, although more have predicted the RBA will cut the rates, only 78% believe they should.
While we wait and see what happens with the cash rate, some banks seem to be getting on the front foot. Commonwealth Bank reduced its Digi Home Loans variable rates by up to 0.6% for new customers earlier in the month. Last month Westpac also reduced the variable rates for its package home loans. Macquarie Bank also reduced several of its variable rates this month.
Is there anything you can do now?
The best thing you can do right now is be really aware of what rates are currently on the market.
Here are some questions to ask yourself:
- What are the interest rates on the market right now for my loan type and equity?
- How competitive is the rate I'm currently paying in comparison?
- Am I getting everything I want from the loan I have currently?
By asking yourself these questions now and pre-emptively assessing the market, you'll be better prepared to judge if there's anything to do after the decision.
Lenders don't always pass on the rate cuts, which we saw in the rate cuts during 2019 and 2020. If your lender doesn't pass on the cut, or only passes on a portion of it, you'll know how much better of a deal you can get elsewhere.
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