The Reserve Bank of Australia has begun cutting interest rates. After one of the most sustained tightening cycles in the bank's history — the cash rate rose from 0.1% to 4.35% between May 2022 and November 2023 — the rate-cutting cycle that economists were forecasting for 2024 finally arrived in early 2025.
As of June 2026, the RBA cash rate sits at 3.60%. The question every mortgage holder in Australia is asking is the same: how low does it go, and when?
What the Banks Are Saying
Australia's major banks have divergent but overlapping forecasts. CBA and Westpac both project the cash rate reaching 3.10–3.35% by the end of 2026, implying one to two further cuts. NAB is slightly more dovish, forecasting 2.85% by early 2027. ANZ sits in the middle, projecting 3.10% by mid-2027.
The consensus view — which markets are pricing — is approximately two to three more cuts totalling 50–75 basis points over the next 12 months. That would bring the cash rate to somewhere between 2.85% and 3.10%.
What That Means for Mortgage Repayments
Every 25 basis point cut in the cash rate reduces monthly repayments by approximately $40–50 per month on a $500,000 mortgage. If the full forecast reduction of 75 basis points materialises, that's $120–150 per month back in the pockets of mortgage holders on that loan size.
On the median Australian mortgage of around $620,000, the impact scales accordingly. It's meaningful — but it's not transformative. Mortgage stress in Australia will not be resolved by the current rate-cutting cycle.
What You Should Do Now
Refinance if you haven't. The difference between the highest and lowest variable rates on offer from authorised deposit-taking institutions in Australia is currently over 1 percentage point. On a $600,000 mortgage, that's more than $6,000 per year. The RBA cutting once more is worth far less than moving to a competitive rate now.
Don't fix. The consensus forecast and current fixed rate pricing both suggest that fixing for 2 or 3 years now would leave you worse off than staying variable. The exception is if certainty of repayment amount has genuine value to your financial situation.
Offset account. In a falling rate environment, every dollar in an offset account is working at a declining (but still real) return. Don't be tempted to spend the buffer.