Interest rate forecast and predictions for 2026

What is happening with the cash rate?

Last year, variable rate borrowers were offered a measure of reprieve when the Reserve Bank of Australia cut the cash rate three times, but it seems that the era of cuts is well and truly over.

The RBA has so far hiked the cash rate three times this year, but chose to hold it steady at 4.35% at its meeting in June. Further rises are not yet out of the question, though.

Uncertainty remains thanks to the ongoing conflict in the Middle East, and economists at the big four banks are currently split on the question of whether we’ll see further hikes this year.

Compare Home Loans

Will Australians see rate cuts in 2026?

With rate cuts unlikely in the near future, the big four banks have now started to question whether we’ll finally see cuts in 2027, and three of the four are predicting that we’ll see relief by mid-year. The more immediate question is whether we’ll see another hike in 2026.

Following the RBA’s June meeting, at which it made the decision to hold the cash rate steady, the bank’s board explicitly said that it will remain “focused on its mandate to deliver price stability and full employment.”

The statement went on to say that the board “will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required,” meaning that another hike this year is absolutely not out of the question.

All eyes will be on the RBA for the next cash rate call on August 11.

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 predicts that we’ll see 25 basis point cuts in September and December of 2027, bringing the cash rate to 3.85% by the end of next year.
• CBA predicts that we’ll see 25 basis point cuts in May and August of 2027, bringing the cash rate to 3.85% by the third quarter of next year.
• NAB predicts that we’ll see 25 basis point cuts in June, September and December of 2027, bringing the cash rate to 3.60% by the end of next year.
• Westpac currently predicts two more 25 basis point hikes in August and September, bringing the cash rate to 4.85%.

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 August 11 at 2.30pm.

Will interest rates rise again in 2026?

One of the RBA’s key mandates is to keep inflation in line in the economy, and given comments by the board, a further hike is a real possibility.

If the bank’s baseline forecast proves to be inaccurate, and the current conflict is not resolved soon, then we may well see another hike this year, potentially in August.

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.

Compare Home Loans