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Eden Radford
- 5 min readLatest News
Interest Rate Predictions & Forecast Australia | RateCity
From May 2022 to November 2023, the Reserve Bank of Australia (RBA) increased the cash rate 13 times, in an effort to tame inflation.
This current cycle of cash rate movements started with a cash rate of 0.10% in April 2022. We are now considered to be at the peak of the cycle, with a rate of 4.35%.
Many borrowers are eager to know when the RBA will begin cutting the cash rate. If the RBA does choose to cut - and provided the borrowers’ bank passes the cut on in full - it could mean relief for mortgage repayments.
However there are a number of factors that will determine if the RBA will cut the cash rate, but we can look to the big four bank economic teams for some clues.
Big four banks’ cash rate forecasts
The RBA has kept the cash rate on hold at its first two meetings of 2024, and while the most recent quarterly inflation data suggests another hold at May's meeting, it’s never a guarantee.
The big four bank economic teams have all cast their predictions for the next series of cash rate movements:
- CBA: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- Westpac: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- NAB: Peak of 4.35% in November 2023, then dropping to 3.10% by November 2025
- ANZ: Peak of 4.35% in November 2023, then dropping to 3.60% by June 2025
Keep in mind that these are just predictions, and that the big banks are subject to change these forecasts.
What would a cash rate cut mean for my home loan?
According to the Reserve Bank of Australia, the average existing owner-occupier is on a variable home loan rate of 6.36%.
This is what average home loan interest rates may look like if the big four bank predictions are accurate, and the banks pass on the rate cuts in full.
Average interest rates based on big four bank cash rate predictions
|
Starting Month |
Average rates based on CBA forecast | Average rates based on Westpac forecast | Average rates based on NAB forecast | Average rates based on ANZ forecast |
|
May-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jun-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jul-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Aug-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Sep-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Oct-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Nov-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Dec-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Jan-25 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Feb-25 |
5.86% | 6.11% | 5.86% | 5.86% |
|
Mar-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
Apr-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
May-25 |
5.61% | 5.86% | 5.61% | 5.61% |
|
Jun-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Jul-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Aug-25 |
5.36% | 5.61% | 5.36% | 5.61% |
|
Sep-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Oct-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Nov-25 |
5.11% | 5.36% | 5.11% | 5.61% |
|
Dec-25 |
5.11% | 5.11% | 5.11% | 5.61% |
Source: RateCity.com.au, big bank cash rate forecasts as of 30/04/2024.
If you are currently on a variable rate home loan, and your lender has passed on on these rate hikes in full, you may find your home loan repayments have become significantly more expensive.
If you are still on a fixed rate home loan from the low-rate era, when your loan term ends you may be reverted to a much higher interest rate.
How high have mortgage repayments risen?
RateCity has crunched the numbers on how these rate hikes could have affected repayments on a 25-year, $500,000 home loan.
Assuming that your lender passed on every single cash rate hike in full to your home loan, and that you are on a variable rate loan, you may find that your monthly repayments were $1210 more expensive in April 2024 compared to April 2022.
How much more you may pay on your home loan in 2024
| Home loan | Monthly repayments |
| Average rate in April 2022 – 2.86% | $2,335 |
| Forecast average rate in 2024 – 7.11% | $3,545 |
| Difference | $1,210 |
Source: RBA average owner-occupier variable rate for existing customers, April 2022. RateCity.com.au. Note: Based on a 25-year, $500k home loan, comparing repayments with RBA average rate in April of 2.86% versus a 7.11% interest rate from CBA’s predicted cash rate peak of 4.35% in 2024. Does not factor in fees.
This is a significant amount for homeowners to find within their already strained household budgets - the equivalent of buying a new iPhone every month! Homeowners may want to take action as soon as possible to accommodate higher repayments, including:
- Making extra repayments to chip away at your loan principal;
- Paying into an offset account or redraw facility to help reduce your interest charges; and
- Refinancing to a lower-rate lender if it suits your financial needs and budget.
Mark Bristow
- 4 min readLatest News
Financial stress on the rise – what can you do about it?
More Australians may be turning to credit cards to help manage their household expenses, according to a new report. With the cost of living putting pressure on many budgets, what can you do to better manage your credit?
According to the March 2024 Quarterly Consumer Credit Insights report from credit bureau Equifax, signs of financial stress amongst Australians are accelerating, with demand for credit cards climbing and arrears increasing across several credit types.
Fewer personal loans and BNPL, but more credit cards
While the report found that unsecured credit demand fell by 3.5% compared to the March 2023 quarter, given a 4.6% decline in personal loan applications and a 24.7% decline in buy now pay later (BNPL) applications, credit card applications increased by 13.2%.
Equifax advisory and solutions general manager, Kevin James, said that many Australians are seeking unsecured credit to relieve cost of living pressures. This was also shown by 29% growth in credit card limits, which Mr James said indicated that Australians are applying for more money on their cards.
Additionally, Mr James said that more Australians were behind on their personal loan repayments:
“While demand for personal loans has dropped, arrears in this portfolio are rising. In fact, personal loan arrears of more than 30 days past due have hit their highest point since 2020. And we expect this trend to continue - personal loan arrears tend to peak in Q2, as festive season spending becomes due. Taken together, these trends across credit cards and personal loans paint a picture of growing financial strain for consumers.”
The Reserve Bank of Australia (RBA) has also been keeping an eye on Australia’s outstanding credit card debts. The RBA’s February 2024 data shows that the total credit card bill attracting interest on personal credit cards is now $17.61 billion. This would be costing an estimated $8.8 million per day in interest charges, assuming an average credit card interest rate of 18.34%. This could also indicate that an increasing number of households are struggling to get on top of their debt in 2024.
Fewer mortgages, more car loans
The report also looked at demand for secured credit, such as mortgages and secured car loans. This was found to be 2.8% down year on year, thanks to a 4.5% decline in mortgage applications, offset by a 4.7% increase in auto loan applications.
Mr James said that with many Australians having already refinanced in the face of the fixed rate mortgage cliff, demand for new loans has dropped off. However, average mortgage loan limits and arrears were found to be continuing to rise:
“While mortgage demand has declined, the average limit per new mortgage account continued to grow at a consistent pace of 7% year-on-year - reflecting increasing house prices. Additionally, we’ve seen higher mortgage stress this quarter despite stable interest rates; mortgage arrears increased across all categories. Arrears of 30-89 days past due increased 15% year-on-year, while arrears of 90+ days past due were up 17%.”
How can you manage financial stress?
If you can find ways to manage your debts and personal finances rather than missing repayments and defaulting on your loans, you may be able to minimise the risk to your credit score. This could help to keep you from ending up in more financial stress further down the road, as a bad credit could make it harder to borrow more money in the future.
There are several different strategies available to Australians who are experiencing financial stress. The best option for you may depend on your exact circumstances and the goals you want to achieve.
Some of the potential options include:
- Switching to lower repayments such as interest only
- Cutting expenses where possible
- Using technology to automate repayments and/or deposits into savings or investments
- Asking for a better deal, whether by negotiating with your current lender or switching a new one
- Consolidating debts and/or transferring balances
You could also consider contacting your bank and/or credit provider to enter a financial hardship arrangement, or contact the National Debt Helpline to get in touch with a financial counsellor.
Eden Radford
- 4 min readLatest News
CBA cuts 11 interest-free days from its rewards cards
Australia’s biggest bank, CBA, has decreased the number of interest-free days available on its rewards cards in the latest credit card shakeup.
From today, CBA customers with an Ultimate Awards, Smart Awards, Awards, Gold Awards, Platinum Awards or Diamond Awards credit card will see their maximum interest-free days drop from 55 to 44 – a reduction of 11 days.
The bank’s current ‘no frills’ credit cards – the Low Fee and Low Rate cards - will keep their existing interest-free days of ‘up to 55’, while CBA’s Neo card does not charge interest and therefore does not have interest-free days.
Change to interest free days on select CBA credit cards
| Interest free days (up to) | |||
| Card | Old | New | Change |
| Ultimate Awards (Qantas or CBA rewards) | 55 | 44 | -11 |
| Smart Awards (Qantas or CBA rewards) | 55 | 44 | -11 |
| Awards | 55 | 44 | -11 |
| Diamond Awards* | 55 | 44 | -11 |
| Platinum Awards* | 55 | 44 | -11 |
| Gold Awards* | 55 | 44 | -11 |
| Current no frills cards | |||
| Low Fee | 55 | 55 | 0 |
| Low Rate | 55 | 55 | 0 |
| CommBank Neo | N/A | N/A | 0 |
Source: RateCity.com.au. *No longer offered to new customers.
This change from CBA brings the interest-free days on its rewards cards in line with Westpac and NAB rewards credit cards, leaving ANZ as the only big four bank offering up to 55 days on every one of its credit cards.
Current big four bank rewards cards – purchase rate and interest-free days
| Rate | Interest free days | |
| CBA | 20.99% | 44 |
| Westpac | 19.99%* | 45 |
| NAB | 20.99% | 44 |
| ANZ | 20.99% | 55 |
Source: RateCity.com.au. *Note: the interest rate on Westpac’s rewards cards are changing to 20.99% on 20 June.
How many interest-free days do lenders typically offer?
The RateCity.com.au database shows:
- 68% of credit cards offer interest-free terms of ‘up to 55 days’.
- 4 cards offer no interest-free days (excluding those cards that do not charge interest).
- The highest number of interest-free days is 110. This is offered by Humm group's 90 Platinum Mastercard, however, after this it charges the second highest interest rate in the RateCity database at 25.80%.
How do interest-free days typically work?
Interest-free days aren’t as straightforward as they might seem.
Banks typically list the maximum amount of interest-free days on their website, but the actual number depends on where you are in your monthly billing cycle when you make the purchase.
For example:
- If your credit card offers ‘up to’ 55 days, then you typically have between 25 and 55 days to pay your purchases off before you get hit with interest (based on a 30-day billing cycle).
- On cards offering up to 44 days, customers have between 14 and 44 days to pay their purchases back, based on a 30-day billing cycle.
- If you have money owing on your card – even if it’s a single dollar – your interest-free days are usually null and void.
RateCity.com.au research director, Sally Tindall, said: “This drop in interest-free days means CBA rewards card customers will have less time to clear their debts in full before they get hit with interest charges.”
“If customers can’t clear their debts in time, or forget to, they’ll be charged interest on everything they owe, including any new purchases, until they wipe the slate clean entirely,” she said.
“While customers who pay their bill in full every month won’t skip a beat, borrowers who maximise their mortgage offset account by keeping their expenses on interest-free terms on their credit card for as long as possible won’t be thrilled about losing 11 interest-free days.
“Those who plan big purchases at the start of their billing cycle to give themselves the maximum amount of time to pay the money back are also likely to be annoyed by this change.
“Impacted CBA credit card customers should double check any automatic payments or reminders will still occur in time to avoid interest charges,” she said.
Eden Radford
- 4 min readLatest News
Australians sitting on $1.47 trillion in deposits - another record high
Money in the bank from households hit another record high in March, with new figures from APRA revealing Australians stashed more than $8.2 billion in the bank in just one month.
The total amount of household deposits is now sitting at $1.47 trillion, almost $200 billion more than before the start of the cash rate hikes.
Note: deposits from households include term deposits, transaction accounts, mortgage offset accounts and savings accounts.
Total deposits by households, March 2024
| Amount | Monthly change | Year-on-year change | Since start of hikes
(April 2022) |
| $1.47 trillion | +$8.25 billion
+0.6% |
+$102.27 billion
+7.5% |
+$199.65 billion
+15.7% |
Source: APRA monthly authorised deposit-taking institution statistics.
Total deposits by households: APRA
Source: APRA monthly banking statistics.
Home loan books continue to grow
The total value of housing loans to households - which includes both owner-occupied and investor loans - increased by more than $8.50 billion, or 0.4 per cent this month, with all four big banks recording growth in their loan books.
Westpac was the strongest of the big four banks, both in percentage and dollar terms, with a $2.33 billion increase to its loan book, equalling a 0.5 per cent increase, from the previous month.
CBA continued to make a steady comeback this month with a $1.85 billion increase from the previous month – the strongest growth since June 2023, after the bank posted three months of negative growth in the second half of last year.
As a result, the bank’s home lending book has grown annually by less, in dollar and percentage terms, than Westpac, NAB, ANZ and Macquarie.
Macquarie picked up the pace in home lending in March, posting a 0.7 per cent increase from the previous month. This is an acceleration compared to the previous two months which recorded rises of just 0.1 per cent and 0.3 per cent, respectively.
Big four banks + Macquarie: loans to households, housing
| Amount | Monthly change | Year-on-year change | Current share of ADI* market (Mar) | |
| CBA | $549.61 billion | +$1.85 billion | +$9.56 billion | 25.2% |
| +0.3% | +1.8% | |||
| Westpac | $466.46 billion | +$2.33 billion | +$22.77 billion | 21.4% |
| +0.5% | +5.1% | |||
| NAB | $318.61 billion | +$977 million | +$11.98 billion | 14.6% |
| +0.3% | +3.9% | |||
| ANZ | $295.23 billion | +$1.17 billion | +$20.86 billion | 13.5% |
| +0.4% | +7.6% | |||
| Macquarie | $115.65 billion | +$824 million | $10.82 billion | 5.3% |
| +0.7% | +10.3% | |||
| All ADI loans | $2.18 trillion | +$8.50 billion | +$96.26 billion | 100% |
| +0.4% | +4.6% |
Source: APRA. *Authorised deposit-taking institutions. Note: loans to households: housing is total of both owner-occupier and investor loans as recorded by APRA.
RateCity.com.au research director, Sally Tindall, said: “Household deposits continue to defy gravity as Australians remain focused on building their war chests.”
“The rate hikes might be exerting extreme pressure on many household budgets across the country, but those that can are putting a priority on saving every spare dollar they have in the bank,” she said.
“Retail trade figures for March posted a 0.4 per cent drop from the previous month, in another sign Australians are reassessing every dollar they spend.
“With a cloud of doubt forming around the prospect of any rate relief in 2024, things could still get tougher before they get easier. That’s a message that’s not been lost on many Australians.
“Westpac posted the strongest growth in its home lending book this month as the bank continues to chase market share.
“The bank is one of a handful of lenders still offering a cash incentive to refinancers via its subsidiaries St George, Bank of Melbourne and Bank SA.
“This year, CBA has managed to regain the ground it lost in the second half of last year, however, looking at the growth in its home loan book over the last 12 months it still lags behind its key competitors,” she said.
Eden Radford
- 4 min readLatest News
CBA pares back cash rate cut prediction to just one in 2024
Australia’s biggest bank, CBA, has revised its cash rate forecast, reducing the number of predicted RBA cuts in 2024 from three 0.25 percentage point cuts, to just one, scheduled for November.
This decision comes on the back of stronger than expected inflation data from the ABS last Wednesday.
Last week, Westpac’s economic team also updated the bank’s cash rate forecast, reducing the number of predicted cuts from two to one.
As a result, all big four bank economic teams now predict there will be just one cash rate cut in 2024 at the RBA’s November meeting.
Current big four bank cash rate forecasts
| May RBA meeting | Forecasted next RBA move | Total 0.25%-pt cuts in 2024 | Total 0.25%-pt cuts in 2025 | |
| CBA | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| Westpac | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| NAB | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| ANZ | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 2 |
Source: RateCity.com.au. Forecasts current as of 30/04/2024.
Plan for a hike, rather than a cut
While the big four banks are aligned in their prediction for the RBA’s next move, wider recent economic commentary warns the next move from the RBA could be up rather than down.
Reserve Bank Governor, Michele Bullock, made it clear following the RBA’s March meeting that the Board “cannot rule anything in or out”. Therefore, prudent borrowers should plan for a hike, just in case.
Potential impact of a 0.25% pt hike on monthly repayments
Based on a borrower who has not renegotiated their loan since the start of the hikes
| Loan size at start of hikes | Increase if the cash rate rises to 4.60% | Total increase to repayments since start of hikes (14 hikes) |
| $500,000 | $74 | +$1,284 |
| $750,000 | $112 | +$1,927 |
| $1,000,000 | $149 | +$2,569 |
Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining who has not renegotiated since the start of hikes. Starting rate is the RBA avg. existing owner-occupier variable rate of 2.86% in April 2022.
RateCity.com.au research director, Sally Tindall, said: “What these cash rate forecasts tell us is that no-one, not even the RBA knows what its next move is.”
“While we’ve made excellent progress bringing down inflation, there’s every chance this next leg of the battle could be the hardest,” she said.
“You only have to look at the monthly CPI indicator to see signs of stickiness, with the data showing three months of stagnation, followed by a small rise to 3.5 per cent.
“The RBA is not going to revert back to hiking the cash rate without plenty of data on its side, and plenty of warning to borrowers. However, if you’ve got a mortgage, it’s prudent to plan for a hike just to be on the safe side.
“One way to do this is to call your bank and ask for a rate cut. Even a relatively minor 0.25 percentage point cut is enough to cushion the blow of another rate rise, especially if you can pocket the rate reduction as quickly as possible and keep your monthly repayments the same to help build a buffer,” she said.
ABS Consumer Price Index, Australia - annual movement
| Quarterly CPI | Monthly CPI | |
| Dec-22 | 7.8% | 8.4% |
| Jan-23 | 7.5% | |
| Feb-23 | 6.8% | |
| Mar-23 | 7.0% | 6.3% |
| Apr-23 | 6.7% | |
| May-23 | 5.5% | |
| Jun-23 | 6.0% | 5.4% |
| Jul-23 | 4.9% | |
| Aug-23 | 5.2% | |
| Sep-23 | 5.4% | 5.6% |
| Oct-23 | 4.9% | |
| Nov-23 | 4.3% | |
| Dec-23 | 4.1% | 3.4% |
| Jan-24 | 3.4% | |
| Feb-24 | 3.4% | |
| Mar-24 | 3.6% | 3.5% |
Source: ABS Consumer Price Index, Australia. Quarterly CPI and Monthly CPI.
Eden Radford
- 5 min readLatest News
Interest Rate Predictions & Forecast Australia | RateCity
From May 2022 to November 2023, the Reserve Bank of Australia (RBA) increased the cash rate 13 times, in an effort to tame inflation.
This current cycle of cash rate movements started with a cash rate of 0.10% in April 2022. We are now considered to be at the peak of the cycle, with a rate of 4.35%.
Many borrowers are eager to know when the RBA will begin cutting the cash rate. If the RBA does choose to cut - and provided the borrowers’ bank passes the cut on in full - it could mean relief for mortgage repayments.
However there are a number of factors that will determine if the RBA will cut the cash rate, but we can look to the big four bank economic teams for some clues.
Big four banks’ cash rate forecasts
The RBA has kept the cash rate on hold at its first two meetings of 2024, and while the most recent quarterly inflation data suggests another hold at May's meeting, it’s never a guarantee.
The big four bank economic teams have all cast their predictions for the next series of cash rate movements:
- CBA: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- Westpac: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- NAB: Peak of 4.35% in November 2023, then dropping to 3.10% by November 2025
- ANZ: Peak of 4.35% in November 2023, then dropping to 3.60% by June 2025
Keep in mind that these are just predictions, and that the big banks are subject to change these forecasts.
What would a cash rate cut mean for my home loan?
According to the Reserve Bank of Australia, the average existing owner-occupier is on a variable home loan rate of 6.36%.
This is what average home loan interest rates may look like if the big four bank predictions are accurate, and the banks pass on the rate cuts in full.
Average interest rates based on big four bank cash rate predictions
|
Starting Month |
Average rates based on CBA forecast | Average rates based on Westpac forecast | Average rates based on NAB forecast | Average rates based on ANZ forecast |
|
May-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jun-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jul-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Aug-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Sep-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Oct-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Nov-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Dec-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Jan-25 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Feb-25 |
5.86% | 6.11% | 5.86% | 5.86% |
|
Mar-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
Apr-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
May-25 |
5.61% | 5.86% | 5.61% | 5.61% |
|
Jun-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Jul-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Aug-25 |
5.36% | 5.61% | 5.36% | 5.61% |
|
Sep-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Oct-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Nov-25 |
5.11% | 5.36% | 5.11% | 5.61% |
|
Dec-25 |
5.11% | 5.11% | 5.11% | 5.61% |
Source: RateCity.com.au, big bank cash rate forecasts as of 30/04/2024.
If you are currently on a variable rate home loan, and your lender has passed on on these rate hikes in full, you may find your home loan repayments have become significantly more expensive.
If you are still on a fixed rate home loan from the low-rate era, when your loan term ends you may be reverted to a much higher interest rate.
How high have mortgage repayments risen?
RateCity has crunched the numbers on how these rate hikes could have affected repayments on a 25-year, $500,000 home loan.
Assuming that your lender passed on every single cash rate hike in full to your home loan, and that you are on a variable rate loan, you may find that your monthly repayments were $1210 more expensive in April 2024 compared to April 2022.
How much more you may pay on your home loan in 2024
| Home loan | Monthly repayments |
| Average rate in April 2022 – 2.86% | $2,335 |
| Forecast average rate in 2024 – 7.11% | $3,545 |
| Difference | $1,210 |
Source: RBA average owner-occupier variable rate for existing customers, April 2022. RateCity.com.au. Note: Based on a 25-year, $500k home loan, comparing repayments with RBA average rate in April of 2.86% versus a 7.11% interest rate from CBA’s predicted cash rate peak of 4.35% in 2024. Does not factor in fees.
This is a significant amount for homeowners to find within their already strained household budgets - the equivalent of buying a new iPhone every month! Homeowners may want to take action as soon as possible to accommodate higher repayments, including:
- Making extra repayments to chip away at your loan principal;
- Paying into an offset account or redraw facility to help reduce your interest charges; and
- Refinancing to a lower-rate lender if it suits your financial needs and budget.
Mark Bristow
- 4 min readLatest News
Financial stress on the rise – what can you do about it?
More Australians may be turning to credit cards to help manage their household expenses, according to a new report. With the cost of living putting pressure on many budgets, what can you do to better manage your credit?
According to the March 2024 Quarterly Consumer Credit Insights report from credit bureau Equifax, signs of financial stress amongst Australians are accelerating, with demand for credit cards climbing and arrears increasing across several credit types.
Fewer personal loans and BNPL, but more credit cards
While the report found that unsecured credit demand fell by 3.5% compared to the March 2023 quarter, given a 4.6% decline in personal loan applications and a 24.7% decline in buy now pay later (BNPL) applications, credit card applications increased by 13.2%.
Equifax advisory and solutions general manager, Kevin James, said that many Australians are seeking unsecured credit to relieve cost of living pressures. This was also shown by 29% growth in credit card limits, which Mr James said indicated that Australians are applying for more money on their cards.
Additionally, Mr James said that more Australians were behind on their personal loan repayments:
“While demand for personal loans has dropped, arrears in this portfolio are rising. In fact, personal loan arrears of more than 30 days past due have hit their highest point since 2020. And we expect this trend to continue - personal loan arrears tend to peak in Q2, as festive season spending becomes due. Taken together, these trends across credit cards and personal loans paint a picture of growing financial strain for consumers.”
The Reserve Bank of Australia (RBA) has also been keeping an eye on Australia’s outstanding credit card debts. The RBA’s February 2024 data shows that the total credit card bill attracting interest on personal credit cards is now $17.61 billion. This would be costing an estimated $8.8 million per day in interest charges, assuming an average credit card interest rate of 18.34%. This could also indicate that an increasing number of households are struggling to get on top of their debt in 2024.
Fewer mortgages, more car loans
The report also looked at demand for secured credit, such as mortgages and secured car loans. This was found to be 2.8% down year on year, thanks to a 4.5% decline in mortgage applications, offset by a 4.7% increase in auto loan applications.
Mr James said that with many Australians having already refinanced in the face of the fixed rate mortgage cliff, demand for new loans has dropped off. However, average mortgage loan limits and arrears were found to be continuing to rise:
“While mortgage demand has declined, the average limit per new mortgage account continued to grow at a consistent pace of 7% year-on-year - reflecting increasing house prices. Additionally, we’ve seen higher mortgage stress this quarter despite stable interest rates; mortgage arrears increased across all categories. Arrears of 30-89 days past due increased 15% year-on-year, while arrears of 90+ days past due were up 17%.”
How can you manage financial stress?
If you can find ways to manage your debts and personal finances rather than missing repayments and defaulting on your loans, you may be able to minimise the risk to your credit score. This could help to keep you from ending up in more financial stress further down the road, as a bad credit could make it harder to borrow more money in the future.
There are several different strategies available to Australians who are experiencing financial stress. The best option for you may depend on your exact circumstances and the goals you want to achieve.
Some of the potential options include:
- Switching to lower repayments such as interest only
- Cutting expenses where possible
- Using technology to automate repayments and/or deposits into savings or investments
- Asking for a better deal, whether by negotiating with your current lender or switching a new one
- Consolidating debts and/or transferring balances
You could also consider contacting your bank and/or credit provider to enter a financial hardship arrangement, or contact the National Debt Helpline to get in touch with a financial counsellor.
Eden Radford
- 4 min readLatest News
CBA cuts 11 interest-free days from its rewards cards
Australia’s biggest bank, CBA, has decreased the number of interest-free days available on its rewards cards in the latest credit card shakeup.
From today, CBA customers with an Ultimate Awards, Smart Awards, Awards, Gold Awards, Platinum Awards or Diamond Awards credit card will see their maximum interest-free days drop from 55 to 44 – a reduction of 11 days.
The bank’s current ‘no frills’ credit cards – the Low Fee and Low Rate cards - will keep their existing interest-free days of ‘up to 55’, while CBA’s Neo card does not charge interest and therefore does not have interest-free days.
Change to interest free days on select CBA credit cards
| Interest free days (up to) | |||
| Card | Old | New | Change |
| Ultimate Awards (Qantas or CBA rewards) | 55 | 44 | -11 |
| Smart Awards (Qantas or CBA rewards) | 55 | 44 | -11 |
| Awards | 55 | 44 | -11 |
| Diamond Awards* | 55 | 44 | -11 |
| Platinum Awards* | 55 | 44 | -11 |
| Gold Awards* | 55 | 44 | -11 |
| Current no frills cards | |||
| Low Fee | 55 | 55 | 0 |
| Low Rate | 55 | 55 | 0 |
| CommBank Neo | N/A | N/A | 0 |
Source: RateCity.com.au. *No longer offered to new customers.
This change from CBA brings the interest-free days on its rewards cards in line with Westpac and NAB rewards credit cards, leaving ANZ as the only big four bank offering up to 55 days on every one of its credit cards.
Current big four bank rewards cards – purchase rate and interest-free days
| Rate | Interest free days | |
| CBA | 20.99% | 44 |
| Westpac | 19.99%* | 45 |
| NAB | 20.99% | 44 |
| ANZ | 20.99% | 55 |
Source: RateCity.com.au. *Note: the interest rate on Westpac’s rewards cards are changing to 20.99% on 20 June.
How many interest-free days do lenders typically offer?
The RateCity.com.au database shows:
- 68% of credit cards offer interest-free terms of ‘up to 55 days’.
- 4 cards offer no interest-free days (excluding those cards that do not charge interest).
- The highest number of interest-free days is 110. This is offered by Humm group's 90 Platinum Mastercard, however, after this it charges the second highest interest rate in the RateCity database at 25.80%.
How do interest-free days typically work?
Interest-free days aren’t as straightforward as they might seem.
Banks typically list the maximum amount of interest-free days on their website, but the actual number depends on where you are in your monthly billing cycle when you make the purchase.
For example:
- If your credit card offers ‘up to’ 55 days, then you typically have between 25 and 55 days to pay your purchases off before you get hit with interest (based on a 30-day billing cycle).
- On cards offering up to 44 days, customers have between 14 and 44 days to pay their purchases back, based on a 30-day billing cycle.
- If you have money owing on your card – even if it’s a single dollar – your interest-free days are usually null and void.
RateCity.com.au research director, Sally Tindall, said: “This drop in interest-free days means CBA rewards card customers will have less time to clear their debts in full before they get hit with interest charges.”
“If customers can’t clear their debts in time, or forget to, they’ll be charged interest on everything they owe, including any new purchases, until they wipe the slate clean entirely,” she said.
“While customers who pay their bill in full every month won’t skip a beat, borrowers who maximise their mortgage offset account by keeping their expenses on interest-free terms on their credit card for as long as possible won’t be thrilled about losing 11 interest-free days.
“Those who plan big purchases at the start of their billing cycle to give themselves the maximum amount of time to pay the money back are also likely to be annoyed by this change.
“Impacted CBA credit card customers should double check any automatic payments or reminders will still occur in time to avoid interest charges,” she said.
Eden Radford
- 4 min readLatest News
Australians sitting on $1.47 trillion in deposits - another record high
Money in the bank from households hit another record high in March, with new figures from APRA revealing Australians stashed more than $8.2 billion in the bank in just one month.
The total amount of household deposits is now sitting at $1.47 trillion, almost $200 billion more than before the start of the cash rate hikes.
Note: deposits from households include term deposits, transaction accounts, mortgage offset accounts and savings accounts.
Total deposits by households, March 2024
| Amount | Monthly change | Year-on-year change | Since start of hikes
(April 2022) |
| $1.47 trillion | +$8.25 billion
+0.6% |
+$102.27 billion
+7.5% |
+$199.65 billion
+15.7% |
Source: APRA monthly authorised deposit-taking institution statistics.
Total deposits by households: APRA
Source: APRA monthly banking statistics.
Home loan books continue to grow
The total value of housing loans to households - which includes both owner-occupied and investor loans - increased by more than $8.50 billion, or 0.4 per cent this month, with all four big banks recording growth in their loan books.
Westpac was the strongest of the big four banks, both in percentage and dollar terms, with a $2.33 billion increase to its loan book, equalling a 0.5 per cent increase, from the previous month.
CBA continued to make a steady comeback this month with a $1.85 billion increase from the previous month – the strongest growth since June 2023, after the bank posted three months of negative growth in the second half of last year.
As a result, the bank’s home lending book has grown annually by less, in dollar and percentage terms, than Westpac, NAB, ANZ and Macquarie.
Macquarie picked up the pace in home lending in March, posting a 0.7 per cent increase from the previous month. This is an acceleration compared to the previous two months which recorded rises of just 0.1 per cent and 0.3 per cent, respectively.
Big four banks + Macquarie: loans to households, housing
| Amount | Monthly change | Year-on-year change | Current share of ADI* market (Mar) | |
| CBA | $549.61 billion | +$1.85 billion | +$9.56 billion | 25.2% |
| +0.3% | +1.8% | |||
| Westpac | $466.46 billion | +$2.33 billion | +$22.77 billion | 21.4% |
| +0.5% | +5.1% | |||
| NAB | $318.61 billion | +$977 million | +$11.98 billion | 14.6% |
| +0.3% | +3.9% | |||
| ANZ | $295.23 billion | +$1.17 billion | +$20.86 billion | 13.5% |
| +0.4% | +7.6% | |||
| Macquarie | $115.65 billion | +$824 million | $10.82 billion | 5.3% |
| +0.7% | +10.3% | |||
| All ADI loans | $2.18 trillion | +$8.50 billion | +$96.26 billion | 100% |
| +0.4% | +4.6% |
Source: APRA. *Authorised deposit-taking institutions. Note: loans to households: housing is total of both owner-occupier and investor loans as recorded by APRA.
RateCity.com.au research director, Sally Tindall, said: “Household deposits continue to defy gravity as Australians remain focused on building their war chests.”
“The rate hikes might be exerting extreme pressure on many household budgets across the country, but those that can are putting a priority on saving every spare dollar they have in the bank,” she said.
“Retail trade figures for March posted a 0.4 per cent drop from the previous month, in another sign Australians are reassessing every dollar they spend.
“With a cloud of doubt forming around the prospect of any rate relief in 2024, things could still get tougher before they get easier. That’s a message that’s not been lost on many Australians.
“Westpac posted the strongest growth in its home lending book this month as the bank continues to chase market share.
“The bank is one of a handful of lenders still offering a cash incentive to refinancers via its subsidiaries St George, Bank of Melbourne and Bank SA.
“This year, CBA has managed to regain the ground it lost in the second half of last year, however, looking at the growth in its home loan book over the last 12 months it still lags behind its key competitors,” she said.
Eden Radford
- 4 min readLatest News
CBA pares back cash rate cut prediction to just one in 2024
Australia’s biggest bank, CBA, has revised its cash rate forecast, reducing the number of predicted RBA cuts in 2024 from three 0.25 percentage point cuts, to just one, scheduled for November.
This decision comes on the back of stronger than expected inflation data from the ABS last Wednesday.
Last week, Westpac’s economic team also updated the bank’s cash rate forecast, reducing the number of predicted cuts from two to one.
As a result, all big four bank economic teams now predict there will be just one cash rate cut in 2024 at the RBA’s November meeting.
Current big four bank cash rate forecasts
| May RBA meeting | Forecasted next RBA move | Total 0.25%-pt cuts in 2024 | Total 0.25%-pt cuts in 2025 | |
| CBA | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| Westpac | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| NAB | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 4 |
| ANZ | Hold at 4.35% | - 0.25% pts in Nov-24 | 1 | 2 |
Source: RateCity.com.au. Forecasts current as of 30/04/2024.
Plan for a hike, rather than a cut
While the big four banks are aligned in their prediction for the RBA’s next move, wider recent economic commentary warns the next move from the RBA could be up rather than down.
Reserve Bank Governor, Michele Bullock, made it clear following the RBA’s March meeting that the Board “cannot rule anything in or out”. Therefore, prudent borrowers should plan for a hike, just in case.
Potential impact of a 0.25% pt hike on monthly repayments
Based on a borrower who has not renegotiated their loan since the start of the hikes
| Loan size at start of hikes | Increase if the cash rate rises to 4.60% | Total increase to repayments since start of hikes (14 hikes) |
| $500,000 | $74 | +$1,284 |
| $750,000 | $112 | +$1,927 |
| $1,000,000 | $149 | +$2,569 |
Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining who has not renegotiated since the start of hikes. Starting rate is the RBA avg. existing owner-occupier variable rate of 2.86% in April 2022.
RateCity.com.au research director, Sally Tindall, said: “What these cash rate forecasts tell us is that no-one, not even the RBA knows what its next move is.”
“While we’ve made excellent progress bringing down inflation, there’s every chance this next leg of the battle could be the hardest,” she said.
“You only have to look at the monthly CPI indicator to see signs of stickiness, with the data showing three months of stagnation, followed by a small rise to 3.5 per cent.
“The RBA is not going to revert back to hiking the cash rate without plenty of data on its side, and plenty of warning to borrowers. However, if you’ve got a mortgage, it’s prudent to plan for a hike just to be on the safe side.
“One way to do this is to call your bank and ask for a rate cut. Even a relatively minor 0.25 percentage point cut is enough to cushion the blow of another rate rise, especially if you can pocket the rate reduction as quickly as possible and keep your monthly repayments the same to help build a buffer,” she said.
ABS Consumer Price Index, Australia - annual movement
| Quarterly CPI | Monthly CPI | |
| Dec-22 | 7.8% | 8.4% |
| Jan-23 | 7.5% | |
| Feb-23 | 6.8% | |
| Mar-23 | 7.0% | 6.3% |
| Apr-23 | 6.7% | |
| May-23 | 5.5% | |
| Jun-23 | 6.0% | 5.4% |
| Jul-23 | 4.9% | |
| Aug-23 | 5.2% | |
| Sep-23 | 5.4% | 5.6% |
| Oct-23 | 4.9% | |
| Nov-23 | 4.3% | |
| Dec-23 | 4.1% | 3.4% |
| Jan-24 | 3.4% | |
| Feb-24 | 3.4% | |
| Mar-24 | 3.6% | 3.5% |
Source: ABS Consumer Price Index, Australia. Quarterly CPI and Monthly CPI.
Eden Radford
- 5 min readLatest News
Interest Rate Predictions & Forecast Australia | RateCity
From May 2022 to November 2023, the Reserve Bank of Australia (RBA) increased the cash rate 13 times, in an effort to tame inflation.
This current cycle of cash rate movements started with a cash rate of 0.10% in April 2022. We are now considered to be at the peak of the cycle, with a rate of 4.35%.
Many borrowers are eager to know when the RBA will begin cutting the cash rate. If the RBA does choose to cut - and provided the borrowers’ bank passes the cut on in full - it could mean relief for mortgage repayments.
However there are a number of factors that will determine if the RBA will cut the cash rate, but we can look to the big four bank economic teams for some clues.
Big four banks’ cash rate forecasts
The RBA has kept the cash rate on hold at its first two meetings of 2024, and while the most recent quarterly inflation data suggests another hold at May's meeting, it’s never a guarantee.
The big four bank economic teams have all cast their predictions for the next series of cash rate movements:
- CBA: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- Westpac: Peak of 4.35% in November 2023, then dropping to 3.10% by December 2025
- NAB: Peak of 4.35% in November 2023, then dropping to 3.10% by November 2025
- ANZ: Peak of 4.35% in November 2023, then dropping to 3.60% by June 2025
Keep in mind that these are just predictions, and that the big banks are subject to change these forecasts.
What would a cash rate cut mean for my home loan?
According to the Reserve Bank of Australia, the average existing owner-occupier is on a variable home loan rate of 6.36%.
This is what average home loan interest rates may look like if the big four bank predictions are accurate, and the banks pass on the rate cuts in full.
Average interest rates based on big four bank cash rate predictions
|
Starting Month |
Average rates based on CBA forecast | Average rates based on Westpac forecast | Average rates based on NAB forecast | Average rates based on ANZ forecast |
|
May-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jun-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Jul-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Aug-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Sep-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Oct-24 |
6.36% | 6.36% | 6.36% | 6.36% |
|
Nov-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Dec-24 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Jan-25 |
6.11% | 6.11% | 6.11% | 6.11% |
|
Feb-25 |
5.86% | 6.11% | 5.86% | 5.86% |
|
Mar-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
Apr-25 |
5.86% | 5.86% | 5.86% | 5.86% |
|
May-25 |
5.61% | 5.86% | 5.61% | 5.61% |
|
Jun-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Jul-25 |
5.61% | 5.61% | 5.61% | 5.61% |
|
Aug-25 |
5.36% | 5.61% | 5.36% | 5.61% |
|
Sep-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Oct-25 |
5.36% | 5.36% | 5.36% | 5.61% |
|
Nov-25 |
5.11% | 5.36% | 5.11% | 5.61% |
|
Dec-25 |
5.11% | 5.11% | 5.11% | 5.61% |
Source: RateCity.com.au, big bank cash rate forecasts as of 30/04/2024.
If you are currently on a variable rate home loan, and your lender has passed on on these rate hikes in full, you may find your home loan repayments have become significantly more expensive.
If you are still on a fixed rate home loan from the low-rate era, when your loan term ends you may be reverted to a much higher interest rate.
How high have mortgage repayments risen?
RateCity has crunched the numbers on how these rate hikes could have affected repayments on a 25-year, $500,000 home loan.
Assuming that your lender passed on every single cash rate hike in full to your home loan, and that you are on a variable rate loan, you may find that your monthly repayments were $1210 more expensive in April 2024 compared to April 2022.
How much more you may pay on your home loan in 2024
| Home loan | Monthly repayments |
| Average rate in April 2022 – 2.86% | $2,335 |
| Forecast average rate in 2024 – 7.11% | $3,545 |
| Difference | $1,210 |
Source: RBA average owner-occupier variable rate for existing customers, April 2022. RateCity.com.au. Note: Based on a 25-year, $500k home loan, comparing repayments with RBA average rate in April of 2.86% versus a 7.11% interest rate from CBA’s predicted cash rate peak of 4.35% in 2024. Does not factor in fees.
This is a significant amount for homeowners to find within their already strained household budgets - the equivalent of buying a new iPhone every month! Homeowners may want to take action as soon as possible to accommodate higher repayments, including:
- Making extra repayments to chip away at your loan principal;
- Paying into an offset account or redraw facility to help reduce your interest charges; and
- Refinancing to a lower-rate lender if it suits your financial needs and budget.
