RBA keep rates on hold, but savings can still be made

The Reserve Bank of Australia has left the cash rate on hold for September, keeping it unchanged at 4.35 per cent.

In a statement the RBA said that "inflation has fallen substantially since the peak in 2022" but that "inflation is still some way above the midpoint of the 2-3 per cent target range".

It has now been 10 months since the RBA dropped rates.

Despite rates being unchanged there are still ways you can cut your interest rates.

No surprise rates are unchanged

The experts predicted that there will be no drop in interest rates when the RBA met today.

All experts surveyed in Finder's latest RBA Cash Rate Survey said they believed the RBA will hold the cash rate at 4.35 per cent in September.

The majority of panellists surveyed expect to see the first rate cut in hte firs three RMA meetings of next year.

Almost half, or 44 per cent, predict the first cut will come in February 2025.

Independent economist Saul Eslake, of Corinna Economic Advisory can't see a rate cut until early next year.

"I've had the view since November 2023 that the RBA would leave rates unchanged during 2024, and not start cutting them till February 2025 at the earliest, irrespective of what other central banks did," Mr Eslake said following the decision by the US Federal Reserve to cut the cash rate last week.

Likewise LJ Hooker Group Head of Research, Mathew Tiller had predicted the RBA will keep the cash rate on hold this month.

"Despite general softness in recent economic data, inflation remains elevated. The RBA will keep rates on hold until they are confident they have beaten inflation," Mr Tiller said.

When the big banks expect things to change

The big four major banks' economic teams expect the next move to the cash rate will be a cut, however the timing and the number of cuts varies between 3 and 5 cuts in total.

ANZ is predicting the first cut in the cash rate to be made by the RBA at its February 25 meeting, with a further three cuts next year taking the official cash rate down to 3.6 per cent.

ANZ economist Madeleine Dunk recently stated that the bank anticipated two of those cuts to occur in the first half of 2025.

"We anticipate three 25 basis point cuts in total, with two occurring in the first half of the year and one in the final quarter of 2025," Ms Dunk said.

"This series of cuts could potentially reduce the cash rate to 3.6% by the end of next year."

Meanwhile Westpac and NAB have also predicted the first cuts to the cash rate in 2025.

Westpac has pointed to the first cut in the cash rate by the RBA occurring in February with four cuts in total next year leading to a cash rate of 3.35 per cent.

NAB meanwhile has pointed to the first cut occurring in May next year, although it says February is possible, with five cuts in total bringing the cash rate down to 3.10 per cent.

CBA is the only major bank still forecasting a cut before Christmas with a first cut in November this year.

If four cuts take place in 2025, an owner-occupier paying principal and interest with a $600,000 debt and 25 years remaining would see their monthly repayments drop by $357 before the end of the year according to Canstar modelling.

Over the next 15 months, through to the end of 2025, they would pay $2,846 less interest to their bank compared to if there were no cuts.

Where to get a lower interest rate

You may not need to go far to get a lower interest rate, with haggling with your current lender one way to potentially get a cut.

"Rate cuts will come to those who wait, however, borrowers who act now will get the best of both worlds - cuts today and, most likely in 2025," said Canstar Data Insights Director, Sally Tindall.

"Competition between lenders might not be as hot as it was a year ago, but it's not stone cold either. It's still well worth haggling with your current lender or considering a switch to a lender willing to offer you a cheaper offer," she said.

There have also been cuts in both fixed and variable rates

"For the last two months it's been raining fixed rate cuts, but we're likely to see fixed rates fall a lot further before the year is out," Ms Tindall said.

"The biggest cuts in terms of size and scale have undoubtedly been in the fixed rate space, however, this doesn't automatically make them a good option just yet," she said.

With a number of cuts forecast for next year, being locked in with a current fixed rate may be jumping the gun.

Meanwhile variable rates, which will continue to reflect what is happening with interest rates, are also currently being cut.

"The Canstar database shows 18 lenders have cut new customer variable rates in the last two months, including Australia's biggest bank, CBA," Ms Tindall said.

"This is evidence lenders are still willing to throw good deals at borrowers if it means growing their loan book."