Fixed rate mortgages, based on the future expectation of bank funding costs, are regarded as an indirect scale of future official RBA rate actions.

Westpac-owned St George Bank has slashed its two-year fixed rate mortgage by 40 basis points in the latest indication of weakening expectations for rate rises to come.

The bank reduced the interest rate on its two-year fixed rate mortgage to 7.14 per cent from 7.54 per cent yesterday, according to rate tracking service Mozo.com.au.

The trim came the day after the Reserve Bank's move to hold the benchmark cash rate where it has been since May at 4.5 per cent. Yesterday, Community CPS, a national credit union, cut the rates on all of its fixed-year mortgages by 5 to15 basis points.

St George and Community CPS' actions follow reductions to fixed-rate mortgages by ANZ Bank, AMP, Commonwealth Bank, CBA-owned BankWest, ME Bank, St George-parent Westpac and mecu, that started in mid-June. At present, the average two-year fixed rate of the big four is 7.3 per cent.

"The general trend downwards suggests market expectations are that further rate rises are less likely," said Rohan Gamble managing director of Mozo.com.au.

Investors have dismissed economists' cautions of additional rate hikes to come and debt markets are currently making no change to the interest rate over the next 12 months, according to Credit Suisse data.

Macquarie interest rate strategist Rory Robertson this week said interest rate markets were no longer betting on another phase of rate rise by the Reserve Bank.

"At least for now, investors expect the RBA to remain on hold for the next few months, and are flirting with the idea of a rate cut towards the end of the year," he said.