Second RBA rate cut to drive uptick in refinancing

More than a third of Australian homeowners would consider fixing their mortgage if a second rate cut were to be delivered by the Reserve Bank of Australia.

New research from Money.com.au revealed that the RBA May 20 board meeting could trigger one in three borrowers to lock in a fixed rate, in a bid to protect themselves from future rate increases.

The survey found 29 per cent of homeowners would need to see a third rate cut before considering a fixed mortgage, while a smaller portion (15 per cent) would wait for at least four cuts.

A further 13 per cent of respondent would need five or more cuts before locking in a fixed rate – a stark contrast to the 9 per cent of borrowers who claimed February’s rate cut had been enough incentive to consider a fixed rate.

The release of the survey comes only days after the Commonwealth Bank declared war on its competitors by slashing interest rates two weeks before the RBA even meets.

Fixed rates are generally considered by borrowers who prefer predictable monthly payments and avoid unexpected rate hikes.

“Borrowers should consider waiting until interest rates are closer to the bottom of the downward cycle before fixing their mortgage,” Mr Soltani said.

With the RBA expected to deliver multiple rate cuts in 2025, borrowers will be deciding whether to lock in a fixed rate now or wait for even lower rates.