Article Summary
According to Finder’s RBA Survey, 88% of experts predict that the Reserve Bank of Australia (RBA) will cut interest rates on May 20, with most expecting a 25 basis point drop. This cut is expected to provide relief to struggling Aussie homeowners and buyers. The survey also revealed that over half of the experts predict two more cuts in July and August, and anticipate a cash rate of close to 3% by Christmas.
What This Means for You
- If you’re a homeowner, you can expect tangible relief with the predicted rate cut in May and potentially more cuts later in the year.
- If you’re planning to buy a home, lower interest rates could mean lower mortgage payments and increased affordability.
- If you’re an investor, this may be an opportunity to review your investment strategy and take advantage of lower interest rates.
- With the possibility of several more cuts by the end of the year, now might be a good time to reassess your financial plans and consider locking in a fixed rate if it benefits you.
Original Post
Struggling Aussie homeowners and buyers are set to see ‘tangible relief’ come Tuesday with 88pc of experts backing RBA to slash, with a huge call over what numbers will be by Christmas.
Finder’s RBA Survey involving 41 experts and economists saw 36 of them now believe a rate cut is certain on May 20 – 34 of whom predict it will be a 25 basis point drop and two taking the same line as the National Australia Bank predicting a large 50bp fall.
RBA Governor Michele Bullock is facing mounting pressure for another rate cut for 2025. Picture: NewsWire / Nikki Short
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Finder head of consumer research Graham Cooke said “with a February cut and now one expected in May, homeowners might finally start to feel tangible relief”.
“Our experts are predicting several more cuts later this year, and we could be looking at a cash rate of close to 3 per cent by Christmas.”
Finder’s latest RBA Survey has 56pc also picking July and August for cuts, 34pc September and November, and the numbers dwindling after that.
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Bendigo Bank head of economic and market research David Robertson would like to see a larger cut than 25bp come Tuesday.
“I expect the RBA to cut rates by another 25 basis points on May 20, with some risk of a larger cut (35bp would be ideal) but in the absence of a sudden sharper downturn in global conditions a 50bp cut appears unlikely.”
But five of the 41 experts continue to hold out, expecting the Reserve Bank board to do so as well (12pc of those surveyed), with one of the reasons cited being wages growth.
Ord Minnett head of institutional research and asset allocation Malcolm Wood explains: “the labour market remains tight, driving above trend wages growth. With no productivity growth, this puts unit labour costs above the RBA’s inflation target”.
Finder head of consumer research Graham Cooke says we could be looking at a cash rate of close to 3pc by Christmas.
US President Donald Trump’s double backflip on tariffs was also a factor, according to Monash University director of the bachelor of international business program Mark Crosby: “US policy randomness is settling into a pattern of reversals which make US and global slowdowns less likely”.
Regardless of what direction it takes, Mr Cooke said homeowners who maintained the status quo on their repayment amounts they will be better off later.
“With any rate cut, if you can continue making the same payment each month, you will knock more off the principal and pay less interest over the long run”.
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