RBA Governor Michele Bullock will reveal what will happen with interest rates on February 18. (Source: Getty)
Macquarie Bank has made a slight adjustment to its fixed rates just a few weeks before the Reserve Bank of Australia (RBA) is due to meet for the first time in 2025. The central bank will sit down for two days to decide whether to cut, hold or hike interest rates from the current 4.35 per cent.
As we approach the first RBA meeting of the year, Macquarie has reduced its one to three-year fixed rate mortgages by up to 0.16 percentage points. Australia’s fifth-largest lender's lowest fixed rate is now 5.55 per cent, which is available for owner-occupiers paying principal and interest with a deposit of at least 30 per cent.
Canstar's data insights director, Sally Tindall, said the move will likely rattle a few cages in the mortgage industry.
“Today’s cuts from Macquarie Bank might be relatively minor but they could fire up competition in the fixed rate market as we edge closer to a cash rate cut," she said.
“While fixed rates often reflect the cost of wholesale funding, the prospect of cash rate cuts in the next few months is likely to encourage more lenders to take the knife to their fixed rates.
“The fixed-rate market has been relatively quiet over the summer break, with more lenders hiking these rates in the month of December than cutting.
"However, this move from Macquarie could push other lenders into taking a look at the competitiveness of their fixed rates in the lead-up to the RBA’s next meeting."
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She added that while the new rates are "highly competitive", it might not be enough to sway homeowners who are banking on rate cuts from the RBA in the coming months.
But that could signal we are edging closer to mortgage relief if banks are trying to entice Aussies to jump on a fixed rate.
“Right now, the majority of borrowers are opting to stay on a variable rate, most likely in the hope we’ll see a flurry of cash rate cuts that will deliver relief in the months ahead," Tindall said.
“If you’ve got a mortgage, don’t bank on there being a multitude of cuts in quick succession. While at least one cash rate cut this year is highly likely, not even the RBA knows exactly how many there will be.”
What are Macquarie Bank's new fixed rates?
The changes to Macquarie's fixed rates cover one to three-year terms.
The one-year fixed rate fell from 5.85 per cent to 5.69 per cent, which is a 0.16 per cent fall.
The two and three-year rates went from 5.69 per cent to 5.55 per cent, which is a 0.14 per cent drop.
The four and five-year rates haven't changed.
But they aren't the lowest in the market.
For a one-year fixed rate, the smallest interest rate is 5.59 per cent at the Police Bank. You can pick up a 5.49 per cent two-year fixed rate at Easy Street, Bank Vic, and Community First Bank.
SWSbank has the lowest three-year rate at 4.99 per cent, while Newcastle Permanent has the best four and five-year rates at 5.59 per cent.
How does Macquarie compare with the Big Four?
The new rates at Macquarie are far lower than what you might get at Commonwealth Bank, ANZ, NAB and Westpac:
1-year
6.39%
6.09%
6.29%
6.14%
5.69%
2-year
6.29%
5.89%
6.04%
5.74%
5.55%
3-year
5.89%
5.89%
5.89%
5.74%
5.55%
4-year
6.29%
5.89%
6.24%
5.89%
5.69%
5-year
6.69%
5.89%
6.29%
5.99%
5.69%
When do experts think the first RBA interest rate will come?
Yahoo Finance contributor and economist Stephen Koukoulas believes the RBA has all the necessary data to warrant a 0.25 per cent drop next month.
"The first major data release for 2025 was the November monthly consumer price index, which confirmed annual inflation at 2.3 per cent, below the middle of the RBA 2 to 3 per cent target band," he said in a recent op-ed.
"Significantly, it is the fourth straight month that annual inflation is within the RBA target band with the last three months in the bottom half of the band.
"Recall that based on monthly data, annual inflation peaked at a stunning 8.4 per cent in December 2022. The data reinforces, definitively, the view that the inflation problem of late 2021 through to early 2024 has been beaten."
But there are concerns that the dire Aussie dollar could cause the RBA to think twice about a February rate cut. It's been hovering around the high 61 cents to the low 62 cents against the greenback so far in January.
EQ chief economist Warren Hogan told Sky News that the Aussie dollar has a direct relationship with inflation.
“It’s just another reason not to cut interest rates in February and I don’t think they will.
“I think the market is trying to cope with all this political pressure and pre-election noise and I think in the end the RBA does not have an economic reason to cut.”
Recent employment data also cast doubt on a rate cut.
Australia’s official unemployment rate rose to 4.0 in December, up from 3.9 per cent in November, but was under the RBA's forecast of 4.3 per cent.
“The reduction in full time employment provides some impetus for the Bank to consider a cut in the cash rate sooner rather than later,” KPMG chief economist Brendan Rynne said.
“But there is heightened economic uncertainty at present – in particular, there are potentially inflationary consequences of trade protectionist policies adopted by the US, but they may take some time to flow through to higher prices.”
What do the Big Four Banks think will happen to interest rates?
CBA is predicting four 0.25 rate cuts this year and the RBA will start next month
ANZ has forecast just two cuts, with the first to come in February
NAB thinks the RBA will cut rates for the first time in May and there will be three in total for 2025
Westpac also thinks there will be mortgage relief in May and there could be three more rate cuts in the year
