Interest rate forecast: where will interest rates go?

Home loan borrowers in Australia may well be wondering where interest rates will go after the current pause – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go next.

Source: fizkes/Shutterstock.com.

Home loan borrowers in Australia may well be wondering where interest rates will go after the current pause – here are the current cash rate predictions proffered by the big banks, speculating as to where the Reserve Bank of Australia (RBA) may go next.

Whenever the RBA hikes the official cash rate, Australian banks and other lenders are generally quick to follow, raising the interest rates they charge variable rate home loan borrowers.

The RBA board hiked the cash rate a number of times in 2022 and 2023, bringing it to its current level of 4.35%, which is more than full four percentage points above the historic low of 0.10% in April of 2022.

The bank held rates steady at its most recent meeting, announcing the call on Tuesday March 19, and many leading economists are predicting that the rate hikes of the past two years may be behind us.

Currently, the question on economists’ minds does not seem to be if rates will fall in 2024, but when. Here’s what the nation’s big four banks have to say:

ANZ predicts that the current level of 4.35% will be the cash rate’s peak, with the first cuts to start around November 2024, and rates dropping to a level of around 3.60% by mid 2025.
CommBank predicts that the current level of 4.35% will be the cash rate’s peak, and that the first cut is likely to occur around September, with rates eventually dropping to around 2.85% by the middle of 2025.
NAB economists predict that the current level of 4.35% is the cash rate’s peak, with the first cuts to occur in the December quarter of 2024, and rates reducing to 3.10% by the end of 2025.
Westpac predicts that the current level of 4.35% will be the peak, and that we might expect the first rate cuts to occur around September, with the cash rate eventually settling at 3.10% in the September quarter of 2025.

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 May 7 at 2.30pm. It remains to be seen whether the board will make any changes to the cash rate, or continue the pause.

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 (Refinance with variable rate only) with Canstar

If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for homeowners looking to refinance. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest to highest). Products shown are principal and interest home loans available for a loan amount of $500,000 in NSW with an LVR of 80% of the property value. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. Use Canstar’s home loans comparison selector to view a wider range of home loan products. Canstar may earn a fee for referrals.

Tiimely Home | Livein | Owner Occupied | LVR ≤90% | Variable

More details

Fees & charges apply, Australian Credit Licence 496431

Hume Bank | Liteblue | Owner Occupied | LVR 60-80% | Variable

via a Canstar Certified Mortgage Broker

Fees & charges apply, Australian Credit Licence 244248

loans.com.au | Basic Home Loan | Owner Occupied | LVR ≤90% | Variable

More details

Fees & charges apply, Australian Credit Licence 395219

Cashback

More details

Fees & charges apply, Australian Credit Licence 238273 | ^#T&Cs apply

Unloan | Owner Occupied | LVR ≤80% | Variable

More details

Fees & charges apply, Australian Credit Licence 234945

Canstar is an information provider and in giving you product information Canstar is not making any suggestion or recommendation about a particular product. If you decide to apply for a home loan, you will deal directly with a financial institution, not with Canstar. Rates and product information should be confirmed with the relevant financial institution. Home Loans in the table include only products that are available for somebody borrowing 80% of the total loan amount. For product information, read our detailed disclosure, important notes and additional information. *Read the comparison rate warning. The results do not include all providers and may not compare all the features available to you.

Home Loan products displayed above that are not “Sponsored or Promoted” are sorted as referenced in the introductory text followed by Star Rating, then lowest Comparison Rate, then alphabetically by company. Canstar may receive a fee for referral of leads from these products.

When you click on the button marked “Enquire” (or similar) Canstar will direct your enquiry to a third party mortgage broker. If you decide to find out more or apply for a home loan, you can provide your details to the broker. You will liaise directly with the broker and not with Canstar. When you click on a button marked “More details” (or similar), Canstar will direct your enquiry to the product provider. Canstar may earn a fee for referral of leads from the comparison table above. See How We Get Paid for further information.

Cover image source: fizkes/Shutterstock.com.

Thanks for visiting Canstar, Australia’s biggest financial comparison site*

This article was reviewed by our Editor-in-Chief Nina Rinella before it was updated, as part of our fact-checking process.

Alasdair Duncan

Senior Finance Journalist

Alasdair Duncan is a Senior Finance Journalist at Canstar, specialising in home loans, property and lifestyle topics. He has written more than 200 articles for Canstar and his work is widely referenced by other publishers and media outlets, including Yahoo Finance, The New Daily, The Motley Fool and Sky News. He has featured as a guest author for property website homely.com.au.

In his more than 15 years working in the media, Alasdair has written for a broad range of publications. Before joining Canstar, he was a News Editor at Pedestrian.TV, part of Australia’s leading youth media group. His work has also appeared on ABC News, Junkee, Rolling Stone, Kotaku, the Sydney Star Observer and The Brag. He has a Bachelor of Laws (Honours) and a Bachelor of Arts with a major in Journalism from the University of Queensland.

When he is not writing about finance for Canstar, Alasdair can probably be found at the beach with his two dogs or listening to podcasts about pop music. You can follow Alasdair on LinkedIn and Twitter.

In this article