October rate cut a certainty as economy shows further signs of weakness

The Reserve Bank’s monthly meeting is just around the corner, and financial markets are confident that we’ll have another rate cut on our hands. 

If the RBA does go ahead and pull the trigger, it would bring official interest rates down to 0.75% - half of where they sat at the beginning of the year.

At the moment, weaknesses in the economy make a pretty strong case for further monetary easing. Consumer spending has slowed, with high levels of household debt leading to a collective tightening of belts.

And despite the creation of almost 35,000 jobs last month, recent ABS figures showed unemployment rose from 5.2% to 5.3%, inching further away from the RBA’s target of 4.5%. 

Big banks weigh in

After NAB recently brought forward its initial prediction for November, all four major banks agree that an October cut is on the cards.

Chief economist at Westpac, Bill Evans made the call early on, and was vindicated following the release of the RBA’s September meeting minutes.

The minutes hinted quite clearly at an October cut, suggesting that the RBA wasn’t so much admiring its handiwork these past two months as it was planning its next policy move.

CommBank economists revised their predictions on Thursday after the latest round of employment figures came in. ANZ was also swayed by the data, noting that "the slow creep higher in the unemployment rate” will likely force the RBA’s hand.

What’s the government doing to help?

The short answer? Not much.

Lowe has reminded us on several occasions of the limits of monetary policy — that’s why he’s constantly calling on the government to start pulling its weight. But it looks like the government has other things in mind.

“The government has been pretty obviously focused on delivering a surplus, and there are some strong views out there that that’s not the path they should be following right now,” said Marshall.

At a recent meeting of reserve bank elites at Wyoming, Lowe warned that cuts to official interest rates, when not coupled with government efforts to boost spending and investment, would only drive up asset prices.

“To the extent that other policy levers are hard to move, or are stuck, monetary policy is carrying a lot of the weight,” he said. “Monetary policy can't drive long-term growth, but the other policy levers can.”

What would another rate cut mean for mortgages?

Currently, home loan interest rates are at record lows, and plenty of Australians are scrambling to take advantage of current conditions. Another rate cut would throw more gasoline on that fire.

As for how much the banks are likely to pass on to customers, Australians might have reason to be optimistic.

“I don’t think that the banks are going to hold back too much this time. Based on analysis that we’ve done, their net interest margins seem to be holding up reasonably well at the moment,” said Marshall.

“I suspect that we’ll see quite a few lenders pass on most, if not all of the next cut.”

So if you’re looking to buy your first home, or add one more item to your investment portfolio, you’ll be glad to know there’s no shortage of quality home loans available. Check out the selection below, or have a look at our comparison tables for owner occupiers and investors.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 19 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.