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:
- ANZpredicts 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 circ*mstances.
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.
