Interest rate forecast and predictions for 2026
Following a cash rate hold in December, home loan borrowers may be wondering what happens next – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go from here.
09 Dec 2025
Following a cash rate hold in December, home loan borrowers may be wondering what happens next – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go from here.
What is happening with the cash rate?
After several years of steep hikes, and a year without movement in 2024, the central bank finally began lowering rates at the beginning of 2025, and cut the cash rate a total of three times throughout the year.
With inflation on the rise, though, the RBA held the cash rate steady at 3.60% at its December meeting, and at present, the question is if, rather than when we will see further interest rate relief in the new year.
Will Australians see rate cuts in 2026?
Canstar’s data insights director, Sally Tindall says that, as it stands, further rate cuts into the new year appear unlikely, given that inflation is presently not on track to get back within the central bank’s target band of 2-3%.
“At this stage, not even the RBA knows with any great certainty whether its next move will be up or down,” Tindall says.
“Borrowers with a mortgage should not plan for any further rate relief in 2026, and instead, start preparing for a potential hike, just in case one materialises later next year.”
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 into 2026:
- ANZ currently does not predict any further cuts.
- CBA currently does not predict any further cuts.
- NAB currently does not predict any further cuts.
- Westpac currently predicts one 25 basis point cut in May and another in August.
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 February 3 at 2.30pm.
Will interest rates rise again in 2026?
At this stage, there are no predictions for any further cash rate movement in 2025, although the board of the RBA has the final call.
When making monetary policy, one of the RBA’s key goals is the maintenance of full employment in Australia, in order to maintain the overall strength of the nation’s financial system, and recent jobs figures have been strong.
Recent CPI figures show that trimmed mean inflation is sitting at the upper limit of the RBA’s target band, but it does not appear so high as yet that the RBA would justify a rate rise.
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 pros and cons of fixing your home loan, and considering the current interest rates on home loans 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.
This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.
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