AFTER more than two years of refusing to pass on the full amount of Reserve Bank interest rate cuts, the nation's Big Four banks are contemplating something they have never done before - cutting rates out of cycle with the central bank.

Major lenders have had discussions at the boardroom level about self-initiated rate cuts. Westpac is even considering slashing its rate by up to six basis points as early as February.

It would save $160 a year for the average $320,000 mortgage-holder - but would have far wider implications for competition across the sector.

Bell-Potter Securities analyst TS Lim said he expected one of the major banks to make a move by March.

"They won't be aggressive when they cut outside the RBA's movements but I think at least one of them will cut in February or March, which will really force the others to act in response," Mr Lim said.

With the Reserve Bank unlikely to cut rates substantially in coming months, JP Morgan analyst Stephen Walters said funding pressures easing across the world "could now see the banks make out-of-cycle cuts to mortgage rates".

"This would ease financial conditions without the RBA having to adjust policy."

Senior UBS analyst Scott Haslem said that with banks working hard to attract Australian deposits, the mortgage rate could be used as an instrument to attract new customers.

"I think it's very likely," Mr Haslem said. "Global funding costs have come down and, while banks are now sourcing their funding from other sources, it does play a big part." None of the big banks was last night willing to comment on the proposed interest rate cut, for risk of facing price-fixing accusations from the ACCC.

But banking sources last night confirmed there had been separate, internal discussions at the major lenders over the possibility of an out of cycle rate cut.

NAB's executive of personal banking Lisa Gray recently conceded that while the bank was now sourcing more than 50 per cent of funding from term deposits, its funding costs had decreased, easing pressure on the bank's bottom line.

News of the possible rate cuts comes as economists predict the nation will celebrate a "boom year" in 2013.

With the dollar tipped to reach US108c, the sharemarket is also tipped to surge through the psychologically important 5000 mark in coming months.

AMP chief economist Shane Oliver said the positive groundswell from the US avoiding the fiscal cliff was emanating throughout the entire economy - with retailers set to benefit most. While 2012 may have proved a forgettable year for bricks and mortar retailers, Myer boss Bernie Brookes was still positive.

"In the first few hours of trade online (on Boxing Day) we did five times the volume of trade we did on Christmas last year," Mr Brookes said.

Originally published as Big four bankers to make history