Millions of Aussie homeowners could soon breathe a sigh of relief, with a major rate cut expected at the upcoming Reserve Bank of Australia (RBA) meeting in May. The Commonwealth Bank (CBA), the nation’s largest lender, has declared a 0.25% interest rate cut as a near certainty — calling it a “done deal” if inflation figures align with expectations.

Why the RBA Is Likely to Cut Rates

According to CBA’s latest forecast, headline inflation is tipped to rise just 0.8% in Q1 2025, pushing the annual rate down to 2.3% — near the lower end of the RBA’s target range (2%–3%). Meanwhile, trimmed mean inflation (the RBA’s preferred measure) is expected to come in at 0.6% for the quarter and 2.8% annually, which would fall below the RBA’s own forecast.

“If the trimmed mean CPI is in line with our forecast or below, then we consider a rate cut in May is a done deal,” said Stephen Wu, CBA senior economist.

What This Means for Mortgage Holders

A 25 basis point rate cut could slash the average borrower’s monthly repayments by around $91 on a $600,000 loan over 25 years, according to Canstar.

And this could just be the beginning.

CBA is predicting three rate cuts over the course of 2025 — in May, August, and November — bringing the cash rate down to 3.35% by year’s end. If this plays out, mortgage holders could save an estimated $268 a month in total.

What Are the Other Big Four Banks Saying?

All of the Big Four banks are forecasting a rate cut at the May meeting:

• Westpac: Expects 3 cuts by November, cash rate to fall to 3.35%.
• NAB: Predicts 5 cuts, including a possible double rate cut in May, taking rates as low as 2.60%.
• ANZ: Forecasts 3 cuts by August, with the cash rate also ending at 3.35%.

The RBA has also flagged May as an “opportune time” to review its monetary policy, with updated inflation data and economic forecasts due before the meeting.

Should You Refinance Now?

If a rate cut is on the way, this could be your moment to lock in a better deal. At Loan Nerds, we help you compare your current loan with more competitive options from over 50 lenders — tailored to your financial goals.

💡 Loan Nerd Tip: Use our free Loan Match 360 tool to check how much you could save if rates drop.

Don’t wait until rates change. Talk to a mortgage expert at Loan Nerds today and stay ahead of the curve.