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Interest Rate Predictions & Forecast Australia | RateCity

Eden Radford avatar
Eden Radford
- 5 min read
Interest Rate Predictions & Forecast Australia | RateCity

After over a decade of cutting the cash rate, the Reserve Bank of Australia (RBA) increased rates 13 times from May 2022 to November 2023. 

It’s only fair that mortgage holders and would-be borrowers may be nervously wondering how high their home loan rates will go.

This current cycle of cash rate movements saw the cash rate start at 0.10% in April 2022. This means for the average owner-occupier paying a variable rate who has not renegotiated their loan, their home loan rate could be at 7.11% by the end of 2023.

Big four banks’ cash rate forecasts

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 2.85% by June 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.

The RBA kept the cash rate on hold at its first meeting for 2024 in February, and while the most recent monthly inflation data makes for another hold at March's meeting likely, there’s never a guarantee.

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How high could your mortgage interest rate rise?

Prior to the first cash rate hike, the average existing owner-occupier variable home loan rate in April 2022 was 2.86%, according to the Reserve Bank of Australia.

This is what average home loan interest rates may look like if the big four bank predictions are accurate:

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

Apr-22

2.86%

2.86%

2.86%

2.86%

May-22

3.11%

3.11%

3.11%

3.11%

Jun-22

3.61%

3.61%

3.61%

3.61%

Jul-22

4.11%

4.11%

4.11%

4.11%

Aug-22

4.61%

4.61%

4.61%

4.61%

Sep-22

5.11%

5.11%

5.11%

5.11%

Oct-22

5.36%

5.36%

5.36%

5.36%

Nov-22

5.61%

5.61%

5.61%

5.61%

Dec-22

5.86%

5.86%

5.86%

5.86%

Feb-23

6.11%

6.11%

6.11%

6.11%

Mar-23

6.36%

6.36%

6.36%

6.36%

May-23

6.61%

6.61%

6.61%6.61%

Jun-23

6.86%

6.86%

6.86%6.86%

Nov-23

7.11%

7.11%

7.11%

7.11%

Sep-24

6.86%

 6.86%

-

-

Nov-24

6.61%

6.61% 

6.86%

-

Dec-24

6.36%

-

-6.86%

Feb-25

6.11%

6.36%

6.61%-

Mar-25

5.86%

-

-

6.61%

May-25

-

6.11%

6.36%

-

Jun-25

5.61%

-

-

6.36%

Aug-25

-5.86%6.11%-

Nov-25

--5.86%-

Dec-25

----

CASH RATE PEAK

4.35%

4.35%

4.35%

4.35%

Source: RateCity.com.au, Big bank case rate forecasts as of 05/03/2024. 

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 January 2024 compared to April 2022.

How much more you may pay on your home loan at the end of 2023

Home loanMonthly repayments
Average rate in April 2022 – 2.86%$2,335
Forecast average rate in 2023 – 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 r  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.

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Product database updated 14 Apr, 2024

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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