Economist Stephen Koukoulas predicts that homeowners could soon save hundreds of dollars monthly, as there’s a strong likelihood the Reserve Bank will begin cutting interest rates at its February 18 meeting.
Money markets have already priced in nearly four 25 basis point cuts by mid-2026, which will lower mortgage repayments for homeowners and small business loan holders.
My 2025 calls:
GDP H1 1.5%; solid recovery H2 2.75%
Unemployment rate up; towards 4.75%
Inflation hovers 2.25 to 2.75%
Wages growth drops to 3% with downside risk
RBA cuts 150bps
10 yr bonds to 3.75%
AUD regains 70 as USD falls
House prices keep falling -6%
ASX200 weaker 7,500— Stephen Koukoulas (@TheKouk) December 31, 2024
These rate cuts will free up cash for borrowers, potentially boosting consumer spending or debt reduction, supporting economic growth and a healthy labor market.
For example, a 25 basis point cut on a standard 25-year principal and interest mortgage at 6.25% would reduce repayments by $16 per month for every $100,000 in debt. However, the impact will vary based on loan terms and individual conditions.
Source: Yahoo Finance.
