When Will Interest Rates Go Down In Australia?

Universal Finance • May 12, 2025

When Will Interest Rates Go Down In Australia?

For many Australian homeowners and property buyers, one burning question looms large in 2025: when will interest rates go down? After several years of rate hikes aimed at taming inflation, borrowers are eagerly awaiting relief. But when might that happen, and how can you prepare for it?


In this blog post, we’ll look at where interest rates in Australia currently stand, what the Reserve Bank of Australia (RBA) is signalling, how the big banks have moved in the past and why it’s essential to work with a mortgage broker to prepare for the next potential shift.


Where are interest rates now?


As of the time of writing, the Reserve Bank of Australia’s cash rate sits at 4.10%, following a series of increases between 2022 and 2024. These rate hikes were part of the RBA’s strategy to bring down inflation, which had surged in the wake of global supply chain disruptions, a tight labour market and rising energy costs.


The RBA’s cash rate — the overnight rate banks pay to borrow from each other — heavily influences the interest rates banks charge on home loans, personal loans and savings accounts. When the RBA lifts the cash rate, banks typically pass these increases on to customers. Likewise, when the RBA cuts rates, banks can reduce borrowing costs, though not always by the full amount.


Current predictions from experts and the Big Four — when will interest rates drop? 


Most economists and market analysts in 2025 expect the RBA to begin cutting rates towards the second half of the year or early 2026, depending on inflation trends.


Recent RBA statements have hinted that while inflation is coming down, it remains slightly above the central bank’s target band of 3.85%. The RBA has emphasised the need to be cautious, waiting until consistent data shows that inflation is sustainably under control before loosening policy.


Major bank forecasts vary, but here’s a snapshot of current predictions:


  • Commonwealth Bank — Predicts three more cuts for the remaining quarters of the year.
  • Westpac — Expects cuts to begin during the remaining quarters of 2025.
  • NAB — Predicts three cuts starting in late 2025 or early 2026.
  • ANZ — Sees a similar timeline, with three more cuts in store over several RBA meetings.


Timeline of RBA meetings in 2025


The RBA typically reviews the cash rate at its scheduled monetary policy meetings, held 11 times per year (usually on the first Tuesday of each month, except in January).


Here’s the remaining 2025 RBA meeting schedule:


  • 19 – 20 May
  • 7 – 8 July
  • 11 – 12 August
  • 29 – 30 September
  • 3 – 4 November
  • 8 – 9 December


It’s expected that borrowers and analysts will watch these dates closely for any signals that the RBA is preparing to pivot to a more accommodative stance.


Who cuts rates when the RBA reduced the cash rate? 


Looking back at previous cycles, when the RBA cuts rates, especially during the COVID-19 pandemic in 2020, most major lenders followed suit. The big four banks (Commonwealth Bank, Westpac, NAB and ANZ) usually adjust their variable home loan rates in response to RBA moves, although the size and speed of their cuts can vary.


For example, in November 2020, when the RBA slashed the cash rate to a historic low of 0.10%, the big four banks passed on much (though not all) of these cuts to borrowers, particularly on variable rate products. However, they didn’t always cut rates on fixed-term loans or deposit products, and some smaller lenders moved faster or deeper than the majors to attract new customers.


This pattern reminds us that while RBA decisions set the tone, it’s up to individual banks to decide how they adjust their offerings, and this is where working with a mortgage broker can give borrowers a competitive edge.


Why work with a mortgage broker before the next interest rate cut


You might wonder: if interest rates are expected to fall, shouldn’t you just wait? In reality, preparing ahead of time can position you to take advantage of upcoming opportunities.


Here’s why working with a mortgage broker now is a smart move:


  • Review your current loan — A broker can assess whether your current lender offers competitive terms or if refinancing could save you money.
  • Stay ahead of the market — Brokers monitor lender movements and can alert you when the first banks start reducing rates, sometimes even before official RBA cuts.
  • Access more lenders — Brokers have relationships with a wide panel of banks and non-bank lenders, including those that might offer sharper deals in response to rate movements.


Stay ahead of the lending market with Universal Finance Corporation 


While no one can predict with absolute certainty when interest rates in Australia will go down, staying informed and prepared is your best strategy. By working with an experienced mortgage broker, like the team at Universal Finance Corporation, you can position yourself to benefit from upcoming opportunities, whether that means refinancing, switching products or securing a better deal on a new loan.


If you’re ready to plan ahead and work with one of Sydney’s most trusted mortgage brokers, reach out to Universal Finance Corporation today. We’re here to help you navigate the market confidently and secure the right mortgage for your future.

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By Universal Finance • June 24, 2025
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Without a comparison across lenders, it is difficult to know whether a bank's offer is genuinely competitive. Loan approval flexibility If you have non-standard income, a complex financial history or are applying for a specialised loan type, a mortgage broker may be your best option. Brokers work with a wide range of lenders, some of which have more flexible approval criteria that suit different borrower profiles. Banks can have strict lending policies and limited flexibility. If you do not meet their standard criteria, your application may be rejected early in the process, even if another lender would have approved it. Ongoing support after settlement Many mortgage brokers offer ongoing service beyond the loan settlement. They may check in periodically to ensure your loan remains competitive, provide refinancing options or offer guidance if your circumstances change. Once your loan settles with a bank, further support is generally limited to their customer service channels. 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By Universal Finance • May 22, 2025
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