Australian borrowers have been given a glimmer of hope that interest rates could begin falling sooner than previously thought.

This follows news that Westpac Banking Corp (ASX: WBC) has brought forward its forecast for the Reserve Bank of Australia (RBA)’s first rate cut to August 2027.

However, interest rates could still rise again before any relief arrives next year.

Here’s what the bank is expecting.

Why Westpac changed its forecast

According to The Australian, Westpac Chief Economist Luci Ellis expects inflation to ease more quickly during 2027.

The bank believes inflation could fall enough for the RBA to start cutting rates in August next year, rather than waiting until early 2028.

Westpac sees those cuts coming gradually, at 0.25 percentage points each quarter.

However, the outlook for the next few months remains less positive for borrowers.

Rates could rise before they fall

At its meeting last month, the RBA left the cash rate unchanged at 4.35%.

The RBA’s May forecasts showed trimmed mean inflation staying above 3% until the middle of 2027, before easing to 2.5% by early 2028.

Westpac still sees an August rate rise as likely, although what happens after that is less certain.

A second increase in September also remains possible, but Ellis said it could be pushed back or dropped if inflation begins to ease.

The June quarter inflation figures, which are due on 29 July, will be crucial in deciding whether either increase goes ahead.

Any further increase would place more pressure on variable mortgage rates and borrowing costs, especially for those households already dealing with larger repayments.

But keep in mind, higher rates would not affect every borrower straight away.

Households on fixed-rate loans may be protected until their current term ends, while those on variable rates would usually feel the impact almost immediately.

The effect would also depend on whether banks pass on any RBA increase in full.

Why the RBA may take its time

Even if inflation starts to improve next year, Westpac doesn’t expect the RBA to rush into cutting rates.

The central bank lowered rates in 2025, only for inflation to pick up again. Because of that, Westpac thinks the RBA will want clearer signs that inflation is under control before lowering rates again.

The bank is still expecting rates to come down slowly, with much lower borrowing costs unlikely to return quickly.

For mortgage holders, the change gives some hope that relief could arrive sooner than previously thought.

However, the next move may still be higher, with Westpac tipping another rate rise in August.

The post Could the RBA start cutting interest rates sooner than expected? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Aussies born on or after 1 January 1957 can apply for the age pension when they turn 67, whether retired or not.

To be eligible for the full pension, or a part-payment, you have to pass an assets test and income test.

The thresholds for those tests changed earlier this month.

So, let’s take a look at the new thresholds, and also assess whether the pension is enough to see you through retirement.

Is the age pension enough?

On the face of it, the age pension is not enough on its own to cover life’s expenses in retirement.

The full age pension is $1,200.90 per fortnight for singles, and $905.20 per person, per fortnight, for couples.

That translates to $31,223 per year for singles and $47,070 per year for couples.

Australia’s benchmark retirement budgeting tool, the ASFA Retirement Standard, says retirement costs more than this.

A ‘modest’ retirement costs $36,434 per year for singles and $52,473 per year for couples — if you own your own home.

If you’re renting, a modest lifestyle costs $51,164 per year for singles and $69,002 per year for couples.

A ‘comfortable’ retirement costs even more: $55,923 per year for single homeowners and $78,566 per year for couple homeowners.

You can find out exactly how ASFA defines modest and comfortable retirement lifestyles here.

ASFA does not provide an estimate for comfortable retirement costs for renters.

So, how do you fill the gap given the age pension doesn’t cover all living expenses?

Ideally, you’ll have some superannuation, other investment income, or wages income to do exactly that.

But Centrelink has limits on how much you can own and earn while still qualifying for the age pension.

So, let’s go over the newly-revised thresholds for the pension asset and income tests.

Asset test

Your assessable assets include ASX shares, super, bonds, managed funds, rental properties, and cash. Your home is excluded.

Single homeowners can own up to $333,000 in assets and still qualify for a full pension.

If you own assets worth between $333,001 and $733,500, you will qualify for a part-payment.

Single renters can own up to $600,000 in assets and still qualify for the full pension.

If you own assets worth between $600,001 and $1,000,500, you will be eligible for a part-pension.

Couple homeowners can own up to $499,000 in assets while still being eligible for the full age pension.

If you have assets worth between $499,001 and $1,102,50, you will qualify for a part-payment.

Couple renters can own up to $766,000 in assets and still be eligible for the full age pension.

If you own assets worth between $766,001 and $1,369,500, you can apply for a part-payment.

Income test

Singles can earn up to $226 per fortnight and still qualify for the full age pension.

If you earn between $227 and $2,627.80 per fortnight, you can apply for a part-pension.

Couples can earn up to $396 per fortnight and still qualify for the full age pension.

If you earn between $397 and $4,016.80 per fortnight, you will be eligible for a part-pension.

Assessable income includes wages and investment income.

Rental income must be reported each year. For everything else, Centrelink uses generous deeming rates to estimate your annual investment income.

The lower deeming rate is 1.25% and the upper deeming rate is 3.25%.

The asset value threshold is $66,800 for singles and $110,600 for couples.

This means the first $66,800 of your assets, or $110,600 for couples, has a 1.25% deemed rate of interest.

Everything above that is deemed to have earned 3.25% interest.

 

The post How much can you own and earn while still qualifying for the age pension? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Owning BHP Group Ltd (ASX: BHP) shares has been a solid choice for passive income over the last decade. It could still be a good choice for FY27.

There are a couple of reasons why ASX mining shares can deliver an appealing dividend yield. Firstly, they usually have a relatively low price/earnings (P/E) ratio compared to other sectors. Secondly, the big miners are usually generous with their dividend payout ratios.

Iron ore miners like BHP can have particularly low P/E ratios because their earnings can be more volatile than other commodities – the iron ore price can shift significantly, depending on what’s happening with Chinese demand.

But, with the iron ore price sitting at around US$100 per tonne (according to Trading Economics), BHP can still generate compelling iron ore profit. Plus, its growing copper exposure can help provide more stability and diversification to its earnings.

With all of the above in mind, let’s see what passive income payments owners of BHP shares could expect in FY27.

Projected passive income

According to Commsec’s estimate, the ASX mining share giant is forecast to pay an annual dividend per share of A$2.06.

Of course, the potential payout may not be exactly that figure. It could be smaller or larger, depending on commodity prices.

An increasing volume of iron ore coming out of Africa could, for example, negatively impact the iron ore price. But it’s also possible that Chinese demand could be stronger than expected. Time will tell how the next 12 months play out.

If BHP pays that level of income to shareholders, it would translate into a grossed-up dividend yield of 5.2% at the time of writing, including franking credits. The yield isn’t as high as it was a year ago following a rise of close to 50% for the BHP share price – this hurts the prospective yield, though it’s great for long-term shareholders.

How much to invest in BHP shares for $1,000 of annual dividends?

The BHP share price certainly isn’t cheap these days, but investors can still buy a slice of the mining giant.

If investors do receive A$2.06 per share in the 2027 financial year, then to receive $1,000 of annual dividends, an investor would need to own 486 BHP shares.

To buy 486 BHP shares, it would cost an Australian $27,415 at the time of writing.

BHP is a solid business, but I think there are even better options out there for returns.

The post How much must I invest in BHP shares to earn a $1,000 passive income in 2027? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.