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. After that came a series of hikes at the start of 2026, before the central bank held the rate steady at 4.35% at its meeting in June.

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? Economists at the nation’s big four banks predict that the hikes are done for now, but the RBA itself has not ruled out the possibility of more.

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Will Australians see rate cuts in 2026?

In June, all but one of the nation’s big four banks predicted that we’d see rate cuts starting from the middle of 2027, with Westpac being the one holdout. Westpac, however, updated its forecast recently, and now all four agree that we’ll see cuts from next year.

Those are just predictions, of course, and the RBA has made it clear that there could still be another hike on the horizon in 2026. Following its June meeting, the bank’s board said in a statement 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 could still be on the cards.

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 predicts that we’ll see 25 basis point cuts in August and December of 2027, bringing the cash rate to 3.85% by the end of next year.

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 recent comments by the bank’s head Michele Bullock, a further hike is a real possibility.

During a recent speech at an Anika Foundation fundraiser in Sydney, Ms Bullock reiterated the RBA’s earlier position, saying “the board is prepared to act as required to achieve its mandate, including by increasing the cash rate further if needed.”

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.

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