After over a decade of cutting the cash rate, the Reserve Bank of Australia (RBA) has been increasing rates almost every month since April 2022. Homeowners and would-be borrowers may be nervously wondering how high their home loan rates will go.
The big four banks have all cast their predictions for the next few years of cash rate movements. For the average owner-occupier paying a variable rate, your home loan rate could reach 7.11% in 2023.
Big four bank’s cash rate forecasts:
- CBA: Peak of 4.35% by August 2023, then dropping to 3.10% by end of 2024
- Westpac: Peak of 4.35% in July 2023, then dropping to 3.35% by end of 2024
- NAB: Peak of 4.60% by August 2023, then dropping to 3.10 by end of 2024
- ANZ: Peak of 4.35% by August 2023, then dropping to 4.10% by November 2024
Keep in mind that these are just predictions, and that the big banks are subject to change these forecasts. Figures are accurate at the time of publishing.
The cash rate started at 0.10% in April 2022. These big four bank predictions may mean that interest rates on home loans could rise by 450 basis points in just over one year.
Following the June hike to the cash rate to 4.10%, three of the four big banks now predict the cash rate will peak at 4.35% in 2023. NAB predicts a cash rate peak of 4.60%, with two more 25 basis point hikes tipped for July and August.
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 RBA.
Of the 4 majors NAB is forecasting the highest peak at 7.36% by August, with ANZ and CBA expecting their rates to sit around the 7.11% mark. The commencement of reductions is forecast around Feb/March 2024 reducing to an expected low of 5.86% by NAB and CBA late next year.
If you are currently on a variable rate home loan, and your lender passes on these rate hikes in full, you may find your home loan repayments become significantly more expensive. If you are still on a fixed rate home loan from the low-rate era, chances are that when your loan term ends you’ll revert to a much higher rate.
The data for this article has been drawn from several different sources, which is relied upon by the author excluding omissions and/or errors. The views expressed or implied in this article are those of the author and should not be relied upon to make financial and/or business decisions. We recommend each business seek independent professional advice taking into account their own specific business needs. If you feel Tasmanian Collection Service can help your business we welcome the opportunity to discuss your specific needs.