Good news millions of Aussies with a mortgage have been waiting to hear for years

Economic analysts and banking bosses have predicted a rate cut in the next three months, which is welcome news for those struggling with mortgage repayments.

Westpac chief economist Luci Ellis told Daily Mail Australia on Tuesday that the Reserve Bank could cut interest rates soon.

‘The question is actually when and how far?’ she said.

‘We still think the most likely start date is May, but there is a chance of an earlier start, i.e. at the February meeting or the April meetings.

‘It really just depends on the data from here. There are some obvious uncertainties that will be informative for the Reserve Bank.

“They have changed their view a bit, because they are not as aggressive on rate cuts as they have been in recent months.

“There’s still a lot of data to come in to convince them that they’re on the right track to get inflation back to the middle of that target range.”

NAB Group CEO Andrew Irvine said this week he expected the RBA to cut rates by the middle of this year.

The cash interest rate is currently at a twelve-year high of 4.35 percent. The cash interest rate was increased for the first time in May 2022 from 0.1 percent to 0.35 percent.

“If we get that first rate cut, I think it will have a significant impact on the psyche of both consumers and business people, which is probably much greater than the actual impact it will have on cash flow,” Irvine told a bank. newsletter.

Mr Irvine said he expected two more rate cuts to follow the first in the next 12 months.

This was part of the general optimistic assessment that the economy would improve in 2025.

“I believe we are currently at the toughest point of the economic cycle and things will get better from here,” Mr Irvine said.

“We’re seeing tax cuts for Australians who most are actually saving, so deposits in the sector are increasing, which I think is promising.”

However, he said many were struggling.

“People are juggling, people are budgeting and they are budgeting hard to make ends meet every month,” Mr Irvine said.

Westpac chief economist Luci Ellis told Daily Mail Australia on Tuesday that the bank expects interest rates to fall over the next 12 months.

“The most important thing for us is employment and strong labor market conditions across Australia and minimal unemployment.

‘My experience is that as long as people have a job and income comes into the household, most bills and most mortgage payments are paid, and the worst doesn’t happen.

“You’ll see good growth by the end of this year.”

Previously, the NBA, ANZ and Westpac banks had forecast a 25 basis point cut in May, taking interest rates to 4.1 percent.

Commonwealth Bank head of Australian economics Gareth Aird stayed true to his prediction of an earlier cut – especially after the RBA’s first meeting in February.

“Our base case is that the RBA starts normalizing cash rates with a 25 basis point rate cut in February 2025,” he wrote last month.

“We expect an easing of 100 basis points in 2025, which would bring the cash rate to 3.35 percent.”

Mr Aird said the Commonwealth Bank was encouraged by the RBA’s “softening side” in its final statement of the year and in Governor Michele Bullock’s comments at a press conference.

Despite language hinting at a short-term cut, the RBA left rates unchanged for the thirteenth month in a row in December, after quickly raising them to 4.35 percent following the Covid pandemic.

“We are encouraged by today’s statement on our call for a rate cut in February,” Aird said

“But we haven’t crossed the border yet.”

The major banks estimate that interest rates will be cut by between two and five in 2025.