Big Four Split on Rate Cuts as RBA Weighs Its Next Move

All four major banks now forecast eventual rate cuts, but Westpac expects two more hikes before any relief — here's what it means for your repayments.

Australia's cash rate is sitting at 4.35% after three consecutive rises in 2026. For the first time this year, all four of the country's major banks are forecasting that rate cuts will eventually arrive. The question keeping borrowers on edge is when — and whether there are more hikes to endure before we get there.

ANZ has become the last of the big four to shift its position, now forecasting two 0.25 percentage point cuts in 2027 that would bring the cash rate to 3.85%. With that update, as Australian Broker reports, every major bank now has cuts pencilled into its outlook.

Beyond that point of agreement, the picture diverges sharply.

Where Each Bank Stands

Three of the four major banks — CBA, NAB, and ANZ — expect the cash rate to hold at 4.35% for the remainder of 2026 before cuts begin next year. NAB has taken the most optimistic position, breaking from its peers by predicting the RBA's next move will be a cut rather than a hold or a further hike, though the timing remains unclear.

Westpac is the clear outlier. It is still forecasting two further 0.25 percentage point hikes — one in August and again in September — before any cuts eventually arrive, and under Westpac's scenario those cuts would not materialise until 2028. That puts Westpac a full year behind its peers on when borrowers might get some relief.

The split reflects genuine disagreement about where the Australian economy is headed. Inflation remains above the RBA's target band. Global uncertainty continues to weigh on business confidence. But the economy is also slowing, the labour market is softening, and households have already absorbed three rate rises in quick succession this year. A panel of 38 economists and analysts surveyed ahead of the June RBA board meeting found 97% expected the board to hold the cash rate steady — and it did. However, more than half of that same panel (55%) still expect at least one more hike before the end of 2026.

That tension between a weakening economy and above-target inflation is exactly what makes the RBA's path forward so difficult to read.

What Another Rate Rise Would Actually Cost

The disagreement between the major banks is not just an economic debate — it has direct dollar consequences for every household carrying a mortgage.

Analysis published by Australian Broker illustrates the stakes clearly. On a $600,000 loan with 25 years remaining, a single additional 0.25 percentage point increase in August — in line with Westpac's forecast — would add $92 to monthly repayments.

Adding up all four hikes that could land in 2026 under the most pessimistic scenario — February, March, May, and a further increase in August — the cumulative monthly increase reaches $364 on a $600,000 loan. On a $1,000,000 loan, the same four hikes would add $606 per month.

The borrowing capacity effect is equally significant. The three rate rises already delivered in 2026 have reduced how much a single average-income borrower can borrow by around $25,000, and by $49,000 for a two-income household. If the RBA lifts again, the total reduction could reach $37,000 for an individual and $73,000 for a dual-income couple.

For first home buyers, those numbers matter enormously. A reduction in borrowing capacity of that scale can mean the difference between qualifying for a property purchase and being priced out. Use our [borrowing power calculator](/calculators/borrowing-power) to see where your current limit sits based on today's rates.

Variable, Fixed or Split — What the Experts Are Saying

With rate uncertainty running in both directions, the choice between variable and fixed home loans is a live question for borrowers right now.

Among the 38 economists and analysts surveyed ahead of the June RBA decision, 61% recommended a variable rate for a new owner-occupier borrower planning to pay off a property over 30 years. Around a third (36%) suggested a split product. Only one economist backed fixing outright.

The reasoning behind preferring variable is practical: fixed rates have already priced in expected future hikes, and some lenders are advertising fixed products at rates above 6.75% — higher than competitive variable rates, which are still coming in below 6.25% for the best options on the market. Locking in now at those elevated levels could leave borrowers paying above the prevailing rate for years if the RBA does start cutting in 2027 as most of the big four expect.

A split loan — part variable, part fixed — is a reasonable middle ground for borrowers who want some payment certainty while retaining the flexibility to benefit from rate reductions when they arrive.

Whatever approach you take, the first step is understanding what you are currently paying. A consumer sentiment survey found that 40% of Australian homeowners reported struggling to meet their mortgage repayments in May this year — up from 35% in January. If you have not reviewed your rate since the hikes began, there is a real possibility you are paying significantly more than necessary.

Compare [current home loan rates](/home-loans/cheapest) to benchmark your existing rate against the market, or run your numbers through our [refinance savings calculator](/calculators/refinance-savings) to see what switching could save you in real terms. If you are buying for the first time, our [first home buyer home loans](/home-loans/first-home-buyer) section covers the options most relevant to your situation.

The RBA's next meeting will again test whether the hold is as firm as three of the four major banks expect — and every decision shapes the borrower landscape well into 2027.

[Source: Australian Broker](https://www.brokernews.com.au/news/breaking-news/all-four-banks-now-tip-rate-cuts--but-westpac-says-hikes-come-first-289504.aspx)