A surprise shift in Westpac’s cash rate forecast has ignited fresh hope for mortgage holders and potential buyers alike, with the bank now predicting four interest rate cuts through to mid-2026—a move that could send ripples across the property market.
In what could amount to a significant reprieve for struggling households, Westpac expects the Reserve Bank of Australia to slash the cash rate target to 2.85 per cent—a level last seen during the pandemic in November 2022.
Realestate.com.au reported the bank’s revised outlook includes cuts in August and November this year, followed by further reductions in February and May 2026.
According to Canstar.com.au data insights director Sally Tindall, the savings could be substantial.
“If Westpac’s forecast comes to fruition and there are four more RBA cuts through to mid-next year, someone with a $600,000 loan could potentially see their monthly repayments drop by almost $350 a month,” she said.
“This would be a huge relief for households under pressure, however, borrowers should remember this is a forecast, rather than a given.”
Real estate agents navigating today’s hesitant buyer pool may find renewed activity if cuts begin to ease affordability constraints.
Even a single reduction could nudge the needle: “A single 0.25 percentage point cash rate cut, if fully passed on by lenders, could reduce monthly repayments on a $600,000, 25-year mortgage by $90,” Ms Tindall said.
As for when the first move might come, NAB stands apart from its Big Four peers, tipping a cut as early as July 8, while Westpac, CBA, and ANZ point to August.
Meanwhile, lenders are already jostling for attention with competitive fixed-rate offerings.
“Fixed rates continue to fall as lenders look to lock in more customers with rates starting with a ‘4’,” Ms Tindall said.
Canstar has identified seven lenders—including Australian Mutual Bank, Bank of Queensland, and Police Bank—offering fixed rates from 4.99 per cent.
“While the majority of these deals are for owner-occupiers paying principal and interest, two banks – Australian Mutual and Police Bank – are also offering this sub-5pc rate to investors,” she said.
Despite the optimism, the RBA is likely to hold firm in July, unless external factors accelerate its hand.
