Borrowers may be catching a break: with Australia's jobless rate posting its steepest monthly rise in years — reaching 4.5% in April, the highest seasonally adjusted figure since November 2021 — the case for a June rate hold has become difficult for the RBA to ignore.
NAB moved swiftly to revise its cash rate forecast on the back of the data, pushing its expectation for the next 25-basis-point increase back to August from June. The bank said the latest unemployment figures “challenge the SoMP forecast while highlighting risks on the full employment side of the mandate”, adding that the board now appears to have greater latitude to monitor incoming data before acting.
All four major banks now expect the cash rate to remain unchanged at the 15–16 June meeting.
The RBA's own May Board minutes had already flagged a desire for space to assess the economic fallout from the conflict in the Middle East and the cumulative impact of three earlier rate rises — and with unemployment now running well above the RBA's own Q2 forecast of 4.2%, there is less urgency to lean against inflation risks.
While a June hold is now the consensus, the outlook beyond that meeting is far from uniform.
For brokers, the divergence between lenders is a timely conversation starter. Canstar.com.au data insights director Sally Tindall put it plainly:
"Westpac and NAB still expect further hikes, while CBA and ANZ are expecting this level of pressure to remain for the foreseeable future. In short, the cost-of-living crisis isn't going anywhere," Tindall said.
Should NAB's August scenario play out, the repayment impact on borrowers would be tangible. Based on Canstar modelling, an owner-occupier with a $600,000 mortgage and 25 years remaining would see monthly repayments climb a further $92 in August, bringing the cumulative increase across four hikes — February, March, May, and August — to $364 per month. On an $800,000 loan that total monthly increase reaches $485; on $1 million, it reaches $606.
While the rate outlook remains unsettled, the more immediate opportunity for many clients lies in their current mortgage rate. Canstar analysis shows that owner-occupiers who took out a mortgage five years ago without renegotiating are now typically paying a variable rate of 7.01%.
"If you are now sitting on a rate starting with a seven, you're essentially paying a big fat loyalty tax to your bank, especially as an owner-occupier," Tindall said.
The numbers behind that loyalty tax are striking. Switching from 7.01% to a competitive rate of 5.99% on a $600,000 balance could save that borrower more than $11,000 over two years, even after accounting for approximately $1,150 in switching costs — a net gain that dwarfs the cost of acting.
"While a hold in June is by no means guaranteed, this potential reprieve is a window to shop around and shore up your budget," Tindall said.
Lender competition remains robust despite the rate environment.
"Banks are still fiercely competing for quality borrowers. Even after this latest hike, there will still be around 40 lenders with at least one variable rate at 5.99% or below," Tindall said.
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