The Reserve Bank of Australia meets today and economists are predicting that there will be a further cut of 75 to 100 basis points after new data showed pressures receding rapidly.
This will take the official cash interest rate to 4.5 per cent for the first time since June 2002.
Repayments on an average $250,000 home loan would fall by 7 percent to $1662 a month, from $1790, if lenders reduce their standard variable mortgage rates by 75 basis points in December, in line with an RBA move.
The RBA's biggest concern is that falling confidence will feed through to consumers bunkering down and not spending.
The Central bank has cut two full percentage points off the cash rate in the past three months.
Based on the inflation gauge readings so far, the official consumer price index could drop to an annual rate of 3.5 per cent in the December quarter compared to 5.0 percent at the end of September.