Big four bank NAB has changed its predictions of the Reserve Bank of Australia's (RBA) next move on interest rates when they meet next month.
The bank is now predicting that the RBA will cut rates by 50 basis points to 2.6 per cent, which if passed on, could cut hundreds of dollars off the average mortgage.
It is also predicting a further cut in July, resulting in five cuts by the first quarter of next year.
It comes after a week of market chaos, with NAB saying slow growth in Australia's economy means the RBA's restrictive stance is no longer appropriate.
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NAB's chief economist Sally Auld said the headwinds from global conditions were strong, but that conditions were still highly unpredictable.
"Our call for a 50bps easing in May reflects the fact that with the real cash rate of 1.3 per cent and policy currently restrictive, the RBA needs to play catch up," Auld said.
"Once the cash rate reaches a level more consistent with a neutral policy setting, we then expect the RBA to pause for a few months before taking the cash rate into modestly accommodative territory."
CBA, Westpac and ANZ are predicting a cut of 0.25 per cent in May.
Analysis from Canstar shows that if the RBA makes a larger 0.50 per cent cut, and the banks pass that on, the household savings on mortgages could be significant.
With a 0.50 per cent rate cut, a $600,000 mortgage could see repayments drop by about $181 per month to an average of $3707 per month.
Mortgages of $750,000 could see a drop of $226, and $1 million mortgages could see monthly repayments fall by $302.
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