- NAB has slashed fixed rate mortgages
A Big Four bank has slashed fixed mortgage rates in a sign the Reserve Bank could start cutting rates early next year.
National Australia Bank has cut two-year fixed rates by 55 basis points to 6.04 per cent.
One-year fixed rates have been trimmed by 40 basis points to 6.29 per cent while three-year fixed rates have been reduced by 10 basis points to 5.89 per cent.
Canstar noted 37 lenders had cut fixed rates during the past month, including Macquarie Bank which offers a market-leading 5.39 per cent fixed rate for two to five years.
Australia’s banks are now offering fixed mortgages rates that are more competitive than variable rates, with financial markets expecting four RBA rates cuts in 2025.
The Reserve Bank’s September meeting minutes were also released on Tuesday, hinting that rate cuts are likely in 2025.
‘On the other hand, members observed that there were scenarios in which future financial conditions might need to be less restrictive than they were at present,’ it said.
RBA Governor Michele Bullock last month confirmed a rate rise wasn’t considered at the Reserve Bank’s September meeting, which makes rate cuts in early 2025 more likely.
Australia’s economic growth pace of 1 per cent is already the weakest since 1991, the year of a recession, when the effects of the pandemic were excluded.
A major bank has slashed fixed mortgage rates in a sign the Reserve Bank could start cutting rates early next year
Underlying inflation of 3.4 per cent is still well above the RBA’s 2 to 3 per cent target but the Reserve Bank minutes hinted price pressures could ease at a faster pace than anticipated.
‘One such scenario was if the economy proved to be significantly weaker than expected and this placed more downward pressure on underlying inflation than expected,’ the minutes said.
‘Another scenario was if inflation proved less persistent than assumed, even without weaker-than-expected activity.
‘This could occur, for instance, if rent inflation fell more rapidly, falling petrol or other commodity prices materially reduced firms’ cost base or the decline in discretionary spending flowed through materially more quickly to services inflation.’
The Reserve Bank’s 13 interest rate rises in 2022 and 2023 were the most aggressive since the late 1980s.
But the 30-day interbank futures market sees the cash rate falling from an existing 12-year high of 4.35 per cent to 3.35 per cent for the first time since March 2023.
