The Reserve Bank of Australia (RBA) will meet this week to decide whether to cut the official cash rate, and all four major banks — Commonwealth Bank (CBA), Westpac, NAB, and ANZ — now agree: a rate cut is likely.

If the RBA moves as expected, the cash rate will drop from 3.85% to 3.60% on July 8, offering a third round of relief for borrowers in 2025.

Why Are the Banks Expecting a Cut?

Recent economic data has signalled a softer outlook:

• Inflation has eased, with the trimmed mean CPI falling to 2.4% in May — the best result since 2021.
• Retail spending remains weak, despite a modest rise.
• Consumer confidence has stalled, with uncertainty around global trade policies and the labour market.

These indicators have convinced the Big Four that the RBA is likely to act now — even if just weeks ago, some banks expected a later move.

CBA, the largest lender in Australia, shifted its forecast from August to July following strong inflation results. ANZ also changed its call, citing uncertainty in spending trends and consumer sentiment.

“We now expect the RBA to cut the cash rate by 25 basis points at its July meeting,” said ANZ’s Head of Australian Economics, Adam Boyton.

Will There Be More Rate Cuts?

That’s likely — but predictions vary. Here’s what each of the Big Four expect:

• CBA: Two more cuts in 2025, taking the cash rate to 3.35%
• Westpac: Four more cuts, reaching 2.85%
• ANZ: Two more cuts to 3.35%
• NAB: Three more cuts to 3.10%

This shows that while a July cut is broadly expected, the future path of interest rates will still depend on upcoming inflation, employment, and consumer spending data.

How Much Could You Save?

If the RBA cuts by 0.25%, homeowners with a $600,000 mortgage over 25 years could save around $90 per month, according to Canstar. That rises to $150 per month for a $1 million mortgage.

If four more rate cuts follow, monthly savings could reach $350 for a $600,000 loan — a substantial improvement for household budgets.

What About Borrowing Power?

Interest rate cuts don’t just reduce repayments — they can also increase how much buyers can borrow. For example:

• A single average-income earner could borrow $12,000 more after the May rate cut
• A couple could access $23,000 more
• With four additional cuts, borrowing power could rise by up to $50,000 in 12 months

This boost could help more buyers enter the market or afford a better property — though it may also lead to increased competition and higher prices.

“When borrowing limits rise across the board, it’s usually sellers who benefit most,” said Canstar’s Sally Tindall. “Unless more homes are listed for sale, prices may rise further.”

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What Should Borrowers Do Now?

If you’re already a homeowner:

• Review your current rate — your lender may not pass on the full cut.
• Consider refinancing — a lower rate could save thousands over the life of your loan.

If you’re looking to buy:

• Check your updated borrowing power — it may be higher after recent and upcoming cuts.
• Act early — competition could increase if more buyers re-enter the market.

At Loan Nerds, we’re here to help you make sense of these changes and make smart moves in a changing market. Whether you want to refinance, purchase, or explore investment opportunities, speak to our mortgage experts today.