Finance 365

NAB TIPS RATE CUTS FROM 2027

Good news for borrowers: NAB thinks the Reserve Bank of Australia (RBA) is done raising rates.

The major lender has dropped its forecast for an August hike, and is now expecting the cash rate to hold at its current level of 4.35% before cuts begin in the second quarter of 2027.

The reason? Economic momentum is clearly fading. Both GDP growth and NAB's own business survey point to a slowdown, with growth likely having already peaked for this cycle.

That said, don't expect rate relief anytime soon. Underlying inflation is still forecast to stay above the RBA's 2–3% target until mid-2027, which means the central bank is unlikely to move quickly.

"We have greater conviction that the next move in rates is down, but less conviction on the timing," NAB chief economist Sally Auld said.

If NAB's forecasts prove correct, the cash rate would fall to 3.6% by the end of 2027.

LISTINGS SURGE AS THE MARKET HITS A TURNING POINT

Something notable happened in May. For the first time in over a year, the number of homes listed for sale nationally is higher than it was 12 months ago.

According to SQM Research, total property listings rose 10.4% in May from April to 258,803 dwellings. New listings are now 12.0% above May 2025 levels, suggesting vendors are returning to the market in meaningful numbers.

But here is the telling part. Five of the eight capital cities – Sydney, Melbourne, Brisbane, Perth and Adelaide – recorded monthly falls in asking prices.

SQM Research managing director Louis Christopher said the combination of rising supply and stalling prices is "usually an early sign that the market is at a turning point."

For buyers, that means more choice and less urgency. For sellers, pricing realistically matters more than ever.

BACK TO SQUARE ONE FOR INTEREST RATES

The Reserve Bank of Australia (RBA) lifted the cash rate by 0.25 percentage points to 4.35% in May.

That is the third increase this year and fully reverses last year’s rate cuts.

It is a sharp reset, driven by inflation moving in the wrong direction. Consumer prices rose 4.6% in the year to March, pushed up by a global energy shock that has seen oil prices climb above US$120 a barrel.

Elevated fuel costs are already feeding into the economy and are expected to lift inflation further in the coming months.

While the RBA cannot control global oil prices, it can influence how those costs feed into wages and broader prices. The focus now is on stopping what starts as a temporary shock from becoming a longer-term inflation problem.

That suggests interest rates may need to stay higher for longer, even as the economy slows.