What is happening with the cash rate?
Last year, variable rate borrowers were offered a measure of reprieve when the Reserve Bank of Australia (RBA) cut the cash rate three times. After that came a series of five hikes through 2026. The most recent of these, on November 3, took the cash rate to 4.85%, its highest level since late 2008.
As a home loan borrower, you'd be forgiven for thinking that your rates are currently on a see-saw. So where to from here?
Will Australians see rate cuts in 2027?
With five cash rate hikes under its belt this year, the RBA has sent a clear signal about its low tolerance for inflation. That said, the latest Monetary Policy Decision statement released by the RBA after its November 3 meeting offered a glimmer of hope that we may see cuts next year.
"The economy is slowing," the Board said in its statement, noting that housing prices have fallen significantly and the unemployment rate has risen. "The forecasts see growth in output slowing further over the coming year, which is expected to reduce capacity pressures and help return inflation to target."
What are the big four banks’ cash rate predictions?
Here's what the major banks currently have to say about the RBA’s predicted movements throughout 2026 and into 2027:
- ANZ economists predict no further cash rate hikes for this cycle, and anticipate that borrowers may see cuts again from November 2027.
- CommBank economists also predict no further cash rate hikes for this cycle, and forecast that borrowers may see cuts again from August 2027.
- NAB economists likewise predict no further hikes for this cycle, and anticipate that borrowers may see cuts again from August 2027.
- Westpac economists predict we've seen the last of the current cycle of hikes, and forecast that borrowers might see cuts again from August 2027.
Where the RBA Board formerly met on the first Tuesday of each month, excluding January, it now meets eight times a year, for two days at a time. This means that the RBA’s next cash rate announcement is due on Tuesday December 8 at 2.30pm.
Will interest rates rise again in 2027?
One of the RBA's key mandates is to maintain low and stable inflation. The Board has signalled it will not hesitate to tighten monetary policy further if necessary to bring prices back under control.
In its November 3 statement, the Board noted that inflation is forecast to remain elevated through much of 2027 and is not expected to return to the 2-3% target band until late in the year.
This means that while further rate hikes may pause, borrowers may not see any relief until the second half of 2027. The Board reiterated that it will "continue to do what it considers necessary to bring inflation sustainably back to target."
Depending on how economic indicators look in the new year, additional hikes could well be on the table.
How can I compare home loans?
If you’re looking for a low fixed or variable rate for a new home loan or a refinance, you can compare home loans with Canstar to see if you can find a lender offering a deal that meets your needs and circumstances.
If you’re considering refinancing from a variable rate to a fixed one, it may also be worth considering the current average home loan interest rates to see how fixed and variable rate loans stack up.
You might also want to consider some of the home loan refinancing deals that might be available.
