Rate Cut or Another Hike? What Lenders Are Forecasting

CBA has pencilled in rate cuts for May and August 2027, while Bendigo Bank warns another hike is still possible before year end.

The Reserve Bank of Australia kept the cash rate at 4.35 per cent at its June meeting, and there is broad agreement that August will deliver the same result. But beyond that, two of Australia's major lenders have published strikingly different views on whether another hike is coming and when cuts might arrive.

Bendigo Bank chief economist David Robertson and Commonwealth Bank (CBA) have each published their rate outlooks this week, as reported by The Adviser. For borrowers on variable rate home loans — or anyone weighing whether to fix before the end of the year — the gap between those two views has real implications for planning.

Bendigo Bank: Budget for One More Rise Before Year End

Robertson welcomed the June hold but was careful not to declare the tightening cycle finished. "It's our prediction here at Bendigo Bank that Aussie home owners will be able to catch their breath in August, with recent economic data pointing to a hold at the RBA's next meeting," he said. Beyond August, however, his tone shifts.

"Our view remains the tightening bias will continue throughout the new financial year, with the risk of one more hike around year end, with recent talk of rate cuts next year appearing premature," Robertson said.

His reasoning centres on the inflation picture. While he acknowledged that some upstream cost pressures have eased — oil prices moderating and improved freight passage through the Strait of Hormuz have helped — the labour market remained firm and inflation only partially tamed. "This doesn't necessarily mean the RBA needs to tighten rates further, as oil prices have moderated and more ships make their way through the Strait of Hormuz," Robertson said, while maintaining the bank's bias toward caution.

For borrowers, Bendigo's view translates to a clear message: do not assume 4.35 per cent is the ceiling. A further 25 basis point increase — taking the cash rate to 4.60 per cent — remains the bank's tail risk for late 2026. Those who have already absorbed multiple hikes over the past two years have little buffer left.

CBA: Peak Reached, Cuts Pencilled In for Mid-2027

Commonwealth Bank took a more optimistic position, arguing that 4.35 per cent already represents the high-water point of this cycle. "We continue to expect the RBA will remain on hold through the rest of 2026," the bank said, pointing to lower energy prices and the memorandum of understanding between the US and Iran as factors that have reduced near-term inflation pressure.

On the economic backdrop, CBA expects conditions to soften in a way that keeps the RBA sidelined. "We also expect economic growth to falter and the unemployment rate to lift, providing the rationale for the central bank to remain on the sideline from here," the bank said.

Reading the June board minutes, CBA concluded another hike is not imminent. "We expect it would take more persistent inflation and signs the economy is not slowing as expected to bring the RBA back to the hiking table," its economists said. The bank acknowledged residual risk: "There are risks further tightening will be required late this year if growth is more resilient and inflation more persistent."

Most usefully for long-term planning, CBA went further than most forecasters and nominated specific months for the first cuts. "Beyond 2026, we see two rate cuts on the agenda for 2027. The most likely timing for rate cuts at this stage is May and August," the bank said. Two quarter-point reductions would take the cash rate to 3.85 per cent by the second half of 2027 — meaningful relief for variable rate borrowers, though still some way off.

What Slowing Mortgage Volumes Signal

The broader lending environment shows how much the rate environment is already biting. The Adviser reports that new average Westpac mortgage application volumes dropped from 33,000 per quarter in the second quarter of 2026 to 30,000 in the third quarter, falling further to 27,000 in the weeks following the federal budget. Westpac forecasts total housing credit growth to ease from 6.5 per cent in financial year 2026 to 4.7 per cent in FY27, with investor credit growth expected to fall from 8.4 per cent to 4.4 per cent over the same period.

ANZ CEO Nuno Matos echoed that trajectory at a June Sydney conference. "We have no doubt the mortgage market will slow down. It has been growing at around 8–9 per cent before, it'll probably grow at 5–6 per cent. That's the short- to medium-term," he said.

A slowing credit market creates pressure on lenders to compete for active borrowers — which works in refinancers' favour. Pricing competition has not dried up, and the banks chasing share tend to be most aggressive for borrowers with clean credit histories and solid equity.

What to Do With Your Mortgage Right Now

Neither CBA nor Bendigo can know exactly how inflation and employment data will land before the year ends. Both acknowledge that risks run in both directions.

The practical response for variable rate borrowers is to take control of what is knowable now rather than waiting on the RBA. Check whether your current rate is competitive — lender pricing competition remains real and a better rate helps regardless of where the cash rate moves next.

If you are weighing whether to fix, use a refinance savings calculator to model what different rate paths mean for total cost. With CBA pointing to the first cuts no earlier than May 2027, locking in for 12 months at a competitive fixed rate could make sense — though fixed rates have typically already priced in some of the expected future movement.

For those with fixed loans rolling off in the next six to twelve months, reviewing your refinance options well before expiry gives you maximum negotiating leverage and avoids a rushed decision at the worst possible moment.