As markets bet that the Reserve Bank of Australia will cut the official rate to stimulate the economy, a group of banks slashed interest rates for their fixed-rate home loans this month. New figures from interest rate comparison website RateCity showed that 18 lenders cut three-year fixed rates--the most popular type of fixed-rate home loans--across 112 loan products.

Banks that have cut rates include the National Australia Bank, ANZ Bank, ING Direct, HSBC, and Suncorp. The average reduction is 0.19 percentage points, making fixed-rate home loans 0.36 percentage points cheaper than an average variable loan--the widest gap in more than a year. However, this is also a sign that variable rates might be cut in the future.

“It’s one of the best indicators we’ve got of where lenders think rates are going,” said RateCity’s data and insights director Peter Arnold.

Though four out of five economists surveyed by Bloomberg believe that an RBA rate cut is on the cards, it remains uncertain how much of it will be passed by banks to their customers. In fact, Otto Dargan, managing director of think it is very unlikely that banks will pass the rate cut in full.

“The election is over, their margins are being squeezed by discounting, compliance, and capital requirements. They’ll be looking for ways to get back some of that margin,” he said. “A lot of our borrowers are choosing to wait until after the RBA announcement to see which lender has the lowest three-year fixed rate and to see what variable rates are available at that time.”