St George Bank has reduced its fixed home loan rates following a recent dip in the inflation rate.

St George Bank has made a significant adjustment to its fixed rates on home loans, responding to a slight dip in the inflation rate. Following the recent data that saw inflation ease from 3.8% to 3.5% in July, the bank has decided to lower rates for a range of home loan products.

From Thursday, those with one-year fixed rate loans will see their interest rates drop to 6.39% per annum, a decrease of 0.45%. For those on five-year fixed rate loans, the reduction is even more substantial, with the rate falling to 6.19% from the previous 6.94%—a drop of 0.75%.

St George Bank's move covers various residential home loans, including both owner-occupied and investment properties. This reduction is expected to offer more attractive options for both homebuyers and investors seeking stability in their repayments.

New rates for owner-occupied home loans with interest-only options will now range between 6.49% and 6.69%, depending on the loan term. However, it's worth noting that the newly adjusted packaged rates include only a 0.15% package discount, contrary to the 0.20% package discount that was initially advertised.

This rate adjustment comes as the inflation rate shows signs of easing, sparking speculation about a potential cash rate cut in the near future. The Reserve Bank of Australia (RBA) is scheduled to meet on September 24 to discuss monetary policy.

The drop in inflation was partly attributed to recent cost-of-living relief measures, including a $300 energy rebate introduced by the federal government. While this rebate has provided some immediate financial relief, economists like Warren Hogan from Judo Bank caution that it is not a long-term fix. Hogan noted that while the rebate helps reduce the immediate cost of living, if excluded from inflation calculations, the underlying inflation remains stagnant.

As we await the RBA's next decision, St George Bank's rate cuts offer a glimmer of hope for those looking for more manageable home loan repayments amidst the shifting economic landscape.