NAB has given interest rate worriers cause to believe that the first rate cut might be on February 18 with the country’s biggest business bank cutting its fixed rate home loan interest rates ahead of the RBA’s decision in two weeks’ time. And property investors were given a bigger cut than homeowners.

News.com.au says Canstar has reported that the cuts for owner-occupier fixed rates were up to 0.25 percentage points, while the cuts for investor fixed loans were up to 0.30 percentage points.

More than a reason to rush in and lock in a better or lower rate of interest, this NAB action suggests that its economics team thinks a rate cut in 14 days’ time looks like a good bet.

Of course, this is great news but it’s important for me to inform you that the CBA economics team also expects the RBA to move to cut rates this month and is tipping four cuts over the course of this year, and maybe another in 2026.

Clearly, if these economists are on the money with their rates forecasting (most economists haven’t been for over a year), then it could be unwise to lock into a fixed rate right now.

Mark Bouris, founder of Wizard Home Loans and Yellow Brick Road (YBR) has often told me that the time to fix your home loan is when rates are very low. In fact, I recall telling the breakfast audience on 2GB when NAB cut its four-year fixed rate under 3% during the Covid period, that “you’ll never see anything like this again!”

That call was based on my belief that we should avoid another pandemic and lockdown that created a weird interest rate scenario, where cash rates nearly hit zero.

News.com.au says “NAB’s lowest fixed rate is now 5.84 per cent, available for owner-occupiers’ paying principal and interest with a deposit of at least 20 per cent on a three-year term.”

However, there are slightly lower ones from smaller banks, as well as the ANZ at 5.74%. I’d argue that if the CBA team is right, then fixed rates could be 4.8% by year’s end.

While this is all good news for borrowers, what could derail this expectation of a rate cut in February? Let’s see:

1. Trump tariffs that could spook the RBA to play it cautiously. This is possible but unlikely, unless President Trump takes his tariffs worldwide. In fact, overnight he paused on his Mexican tariffs after doing a deal with the Mexican president.
2. A falling Aussie dollar could worry the RBA, but it did rise after the Mexican deal and economists largely expect it to rise over 2025.
3. A drop in the unemployment rate, but the next ABS jobs report is on February 20, which comes before the RBA decision.

The RBA board knows interest rate policy works with a lag. The latest lag is one of the longest in recent history. However, it has been weakened by big government spending and huge immigration inflows but with looming elections in WA and at a federal level, and with state governments under pressure to reduce debt levels, our economy will need lower rates to avoid a recession.

Historically, the RBA has been slow to cut and raise but Governor Michele Bullock has worked at the RBA for most of her working life. I suspect she recalls the timing mistakes her predecessors have made and I’m banking on her learning from their mistakes.

I hope I’m right about Bullock and so does NAB’s chief economist, Alan Oster, who, I’ve just learnt, has gone public tipping a February rate cut of 0.25%.