Struggling Aussie borrowers are now universally expected to get a rate cut next month with NAB becoming the last of the Big Four banks to forecast relief soon.

At the start of the year, the Commonwealth Bank was the only lending giant predicting the Reserve Bank would cut the cash rate on February 18, following its first two-day meeting for 2025.

ANZ joined soon after, but surprisingly low inflation data on Wednesday saw Westpac join the club, followed by NAB on Thursday.

A rate cut next month would save an average borrower close to $100 on monthly mortgage repayments.

NAB chief economist Alan Oster had previously expected the RBA to begin cutting rates in May but has revised his forecasts to have the first rate cut since late 2020 occurring in February.

He is expecting the RBA to cut the cash rate five times by February 2026, from the existing level of 4.35 per cent. 

This would only partially undo the RBA’s 13 increases in 2022 and 2023, but it would take the cash rate back to 3.1 per cent for the first time since February 2023. 

Australia’s headline inflation eased to 2.4 per cent in the December quarter – marking the best consumer price index result since March 2021.

‘The fourth quarter CPI confirms that inflation has moderated more quickly than the RBA expected,’ Mr Oster said.

‘This now makes February the most likely starting point for a gradual easing in interest rates.’

The Reserve Bank’s preferred measure of underlying inflation without volatile price items, the trimmed mean, fell to a three-year low of 3.2 per cent in the December quarter.

This put it only slightly above the Reserve Bank’s 2 to 3 per cent target.

A quarter of a percentage point rate cut would see a borrower with an average $600,000 mortgage save $92 on monthly repayments.

Canstar based its calculations on an owner-occupier borrower, paying off principal and interest, on an existing average variable rate of 6.33 per cent, with 25 years remaining on the loan.

The Big Four banks have different views on the likely number of rate cuts in 2025 and 2026.

ANZ is expecting the RBA to make just two cash rate cuts, while NAB is predicting five cuts.

The Commonwealth Bank and Westpac are both expecting four rate cuts in 2025, while the futures market is predicting three rate cuts. 

The banks are forecasting inflation to moderate even though unemployment remains low at just four per cent. 

Mr Oster said the Reserve Bank board had taken its time to be confident wages growth would not feed inflation. 

‘While the board is likely to have gained confidence that inflation will sustainably return to target as soon as late 2025, the labour market remains resilient (and there is some risk of retightening) with growth still expected to pick-up this year,’ he said.

Australians would be getting relief after central banks in the United States, UK, Canada, New Zealand and the European Union began cutting rates last year. 

The Bank of Canada on Thursday cut rates for the sixth time since June last year with its policy rate of 3 per cent significantly lower than Australia’s equivalent 4.35 per cent level. 

But global financial markets panicked on Wednesday night after US Federal Reserve chairman Jerome Powell signalled he was in no hurry to cut rates from an existing 4.25 to 4.5 per cent level.

Australian lenders were already cutting their fixed mortgage rates last year, even as Reserve Bank Governor Michele Bullock gave strong hints there would be no rate cut before Christmas. 

Earlier this month, Macquarie Bank dropped its one-year fixed rate from 5.85 per cent to 5.69, with competition intensifying for new mortgage customers.

Macquarie Bank’s two-year fixed rate fell from 5.69 to 5.55 per cent, and the three-year fixed rate dropped from 5.69 to 5.55 per cent.