Tariff-triggered cuts to interest rates could be just around the corner, with Australian borrowers the likely winners if they come to fruition.
US trade policies have hit media headlines this month following Donald Trump’s controversial tariff announcements on 2 April.
The flow of tariff announcements coming out of the US has rattled share markets globally, driven by uncertainty plus fears of an economic slowdown in the US.
However, there may be a silver lining to the tariff cloud for Australian home owners.
All four of Australia’s major banks are predicting solid cuts to interest rates – and they could come sooner rather than later.
Here’s what the big banks are saying could happen.
NAB believes the Reserve Bank of Australia (RBA) is likely to act quickly, with a 0.5% rate cut in May, followed by 0.25% cuts in July, August, November and even February 2026.
Over at ANZ, the forecast is for the RBA to cut the cash rate by 0.25% in May, followed by 0.25% cuts at its July and August meetings.
That could see the cash rate drop to 3.35% by August, down from 4.1% at present.
Meanwhile, the experts at Westpac expect three more 0.25% rate cuts this year.
And the CommBank view is that the RBA will likely cut rates by 0.75% in total by year’s end, adding that “a rate cut in May is a done deal” depending on inflation figures.
Given the fast-moving tariff situation, it’s no surprise all four big banks have highlighted that their rate forecasts are not set in stone.
And of course, it’s the RBA that calls the shots on the cash rate.
On that front, the RBA isn’t giving much away.
In its latest (April 15) Board meeting, the RBA kept rates on hold, saying it wanted to wait and see how US trade policies could impact the Aussie economy, job market and its arch-enemy – inflation.
We won’t know how inflation is tracking until 30 April when the latest figures come out – about a fortnight before the RBA meets again on 19-20 May.
Long story short, it’s a case of ‘watch this space’ – for a few weeks at least.
A downside of US tariffs is a possible impact on new home building costs.
If Australia ends up facing higher prices for materials used in construction, we could see price increases for new home builds and renovations.
So it’s worth speaking to us about your borrowing power if you’re planning a big construction project in the near future.
If the major banks are right, we could see rates start to fall as soon as next month.
But home owners may be able to enjoy a rate cut of their own even earlier.
Plenty of lenders are offering home loan rates that start with a 5.
That provides lots of potential for you to save by switching to a new loan. It could also be an opportunity to enjoy improved loan features.
Contact us today to see how your home loan shapes up.
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Paul da Silva
Director & Senior Mortgage Advisor
