Australia’s major banks are recalibrating their forecasts for interest rate changes ahead of the Reserve Bank of Australia’s (RBA) July meeting. Among them, ANZ has made a decisive move, predicting a cash rate cut and simultaneously reducing its fixed home loan rates. The decision comes amid signs of economic softness and increasing speculation about a shift in the central bank’s monetary policy stance.
The adjustment marks a notable shift in the bank’s expectations and positions ANZ ahead of its competitors in offering the lowest fixed mortgage rates among the Big Four. This change is significant for both the lending market and borrowers seeking relief amid high interest rate pressure.
Economic Indicators Prompt Earlier Forecast
Adam Boyton, ANZ’s Head of Australian Economics, stated that recent economic data has prompted the bank to bring forward its rate cut forecast. ANZ now expects a 25 basis point reduction in the RBA’s cash rate at the July 2025 meeting, having previously anticipated action in August.
Boyton cited “a weak six-month trend in retail sales,” stagnant consumer confidence, and continued uncertainty around U.S. trade policy as key factors influencing the revised outlook. According to Boyton, a July cut is now considered “the path of least regret,” though he acknowledged that the decision will still be a “much closer call than market pricing would suggest.”
Fixed Rate Cuts Strengthen Competitive Position
Alongside its interest rate forecast, ANZ has introduced cuts to its fixed home loan rates by up to 0.35%. These changes apply across all 1 to 5-year terms, making ANZ the most competitive among the major lenders—Commonwealth Bank, Westpac, and NAB—for fixed mortgage products.
The lowest advertised rate now stands at 5.19% for a 2-year fixed loan for owner-occupiers paying principal and interest. Sally Tindall, Director of Data Insights at Canstar, noted that ANZ has “consolidated its lead as the lowest-cost fixed rate lender out of the majors,” pointing to a strategic effort to attract more customers.
Tindall also highlighted that only 3% of ANZ’s residential mortgage book is currently on fixed rates, suggesting the bank may be looking to increase this proportion in anticipation of future rate movements.
Broader Market Expectations Align
All of Australia’s Big Four banks are now aligned in forecasting a 0.25% cash rate cut in July, which would bring the official rate down to 3.60%. Market watchers anticipate that further cuts will follow. The Commonwealth Bank expects two more cuts, NAB forecasts three, and Westpac projects four in the current rate cycle.
According to Canstar, a single 25 basis point cut would reduce repayments by around $90 per month on a $600,000 loan with 25 years remaining. If three additional cuts occur, borrowers could see monthly savings of up to $350, depending on the size and structure of their loans.
Consumer and Market Reactions Await
With the RBA meeting scheduled for next week, the market will be closely watching for confirmation of these forecasts. Boyton stated that ANZ will reassess the likely pace of future easing after the July meeting and press conference. Meanwhile, the fixed rate adjustments signal ANZ’s strategic positioning ahead of potential monetary easing, aiming to secure a larger share of borrowers seeking stability in a fluctuating rate environment.
As economic data continues to guide monetary policy expectations, banks like ANZ are acting preemptively, adjusting both forecasts and lending terms in anticipation of changes from the RBA.
