When will interest rates go down? Banks are preparing for the RBA's ...

The Reserve Bank of Australia is meeting and banks are forecasting an imminent cash rate cut. 

If it happens, it would be good news for mortgage borrowers hoping to shell out less money on their home loan repayments — especially when forecasts at the end of last year predicted we'd be waiting until autumn for a rate cut. 

The RBA's two-day meeting started today, but we won't hear about rates until Tuesday afternoon.

Here's what the outcome of this week's RBA meeting could mean for you. 

When will interest rates go down?

Possibly this week, but that that depends how commercial lenders respond to whatever the RBA does with its cash rate target. 

The cash rate target is set by the RBA and influences how much commercial banks charge customers for borrowing money — it's currently at 4.35 per cent.

All of the big four banks — ANZ, Commonwealth Bank, NAB and Westpac — reckon the RBA will cut its cash rate by 25 basis points, or by 0.25 percentage points. 

That would take the cash rate target down to 4.1 per cent. 

But that doesn't mean that everyone's mortgage repayments will automatically drop. 

That's because the banks decide whether or not to pass that cut on to their customers.

Will banks drop their interest rates?

No-one knows for sure. 

The banks are under no obligation to cut their interest rates. 

However, given the cost of living is such a big issue at the moment, they would face significant backlash if they didn't pass savings on to customers. 

Business editor Michael Janda grilled Commonwealth Bank boss Matt Comyn about this earlier in the week — here's what he said on that:

"We're, of course, acutely aware of how much our customers would be looking forward to rate relief."

In 2023 — when the cash rate was increasing — banks were pretty quick to announce they were changing their interest rates after an RBA decision. 

Typically, we saw the banks put out a statement within a day or two. 

So we'll be keeping a keen eye on what the banks say after the meeting and will publish a wrap of what the major banks do with their interest rates as soon as we know more.

Will mortgage payments go down?

That depends on people's individual circumstances. 

If they're on a fixed-term mortgage, a cash rate cut shouldn't impact their repayments because they're locked into an interest rate for a set period. 

So their home loan repayments won't change until that period ends.

However, if they're on a part-fixed, part-variable mortgage, or a fully variable mortgage, it might, depending on what the lender decides in the wake of a potential cut to the cash rate. 

Will there be more cuts this year?

All of the big four banks think the RBA will cut its cash rate target again after February. 

But they're spilt on how many cuts we'll see. 

Here's how many more rate cuts they're expecting after next week's meeting:

• ANZ: One more cut — which won't be until August, when the bank forecasts a 3.85 per cent cash rate
• Commonwealth Bank: Two more cuts — expecting it to get down to  3.35 per cent in December
• NAB: At least three more cuts this year — expecting it to get down to 3.35 per cent in December 
• Westpac: Three more cuts this year — expecting it to get down to 3.35 per cent in November

What are RBA's 2025 meeting dates?

The RBA will meet eight times this year.

Here are the dates listed on the Reserve Bank's website:

• February 17 and 18
• March 31 and April 1
• May 19 to 20
• July 7 and 8
• August 11 and 12
• September 29 and 30
• November 3 and 4
• December 8 and 9

However,  the RBA told reporters late last year that some of those meeting dates may shift. 

That may include the November meeting, so it doesn't clash with Melbourne Cup Day on November 4.