Ah, interest rates – the topic that everyone seems to have an opinion on.
Four weeks ago, a number of economists were predicting rate cuts in 2025, with more expected early 2026.
Three weeks ago, the pundits changed their predictions, suggesting that any rate cut would be pushed back to mid 2026.
And just this past week, the goal posts have changed again. Following release of the latest inflation data, commentators are now suggesting further rate cuts may be completely off the table .
What does this mean for you and your loan?
Well, not much really… at least for now.
We don’t think there’s much point spending lots of time trying to predict what’s going to happen with interest rates or when. Because as we’ve seen in recent weeks, things can change very quickly!
We do think however, it’s prudent to keep an eye on the interest rate you’re currently paying – just to ensure your current loan is still suitable for you.
If you haven’t had a home loan review in a while, here is your reminder to do so – before the year is out.
What’s expected for the cash rate when the RBA Board meets on 3 Nov 25?
Let’s look at this further by examining the Cash Rate Futures Yield Curve.
The Cash Rate Futures Yield Curve is a tool that shares insight into how the market expects interest rates to behave. More specifically, it reveals the market’s expectations for RBA Cash Rate movements over the next 18 months.
It’s important to note this curve does not always accurately predict the cash rate (nor the exact time the RBA may decide to change rates). However, it can be useful to keep an eye on – especially if you watch for how the market expectations change over time.
As the market closed on 30 October, the trading price for the ASX 30 Day Interbank Cash Rate Futures Nov 2025 indicated a 7% expectation of an interest rate decrease at the November RBA Board Meeting.
If we examine Michele Bullock’s comments from the last RBA Meeting in Sept, she highlights the uncertainty that remains in global and local economies. She notes that whilst inflation has fallen substantially since the peak, there are indications it may be persistent in some areas.
Bullock says, “Financial conditions have eased since the beginning of the year and this seems to be having some impact, but it will take some time to see the full effects of earlier cash rate reductions. The Board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve. The Board remains alert to the heightened level of uncertainty about the outlook. It noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia.”
With all this chat about rates, is it better to have a fixed or variable rate loan?
Since no-one knows *exactly* what will play out here, we suggest taking a ‘big picture’ approach when weighing up your fixed vs variable rate decision.
With the uncertainty around variable rates presently, the majority of borrowers are preferring to keep things variable for now. At least until we have more of an idea of whether another rate cut eventuates.
That being said, there could be other reasons why you may want to consider a fixed rate loan.
The decision to select a variable rate vs fixed rate is often based on a number of factors. Things you will want to consider are: the rates available; your longer term plans for the property; your desire/ability to pay the loan off faster; the purpose of your loan; and/or perhaps you’re after a specific rate of return on an investment.
If you’d like to chat about your own personal situation to ensure your current loan (and loan and rate type) is still suitable for you, please reach out to our team.
We’re here to help.
