Experts predict interest rate hold from RBA in May 2024

Key points 

• Experts think the cash rate will remain at 4.35% after the May RBA meeting
• Higher-than-expected inflation figures prompt Big Four to change their predictions 
• Refinancing may be the only way to reduce your mortgage repayments until the RBA cuts interest rates. 

With the Consumer Price Index (CPI) coming in hotter on inflation than economists expected this quarter, doubts about a cash rate cut by year’s end are mounting.

The CPI grew 1% over the March quarter, taking annualised inflation to 3.6% in the 12 months to March 2024, which Mozo finance expert, Peter Marshall, says could mean another rate hold on 7 May 2024. 

However, the Reserve Bank of Australia says it won’t rule out cuts or hikes. RBA governor, Michele Bullock, told the media the Board is “responding to data as the data come out.” 

Despite the unpleasant inflation figures in the quarterly CPI, Mozo finance expert Peter Marshall says the RBA is still likely to hold the cash rate in May 2024. But, he cautions that the CPI will have a lot to do with the Board’s moves in the future.  

“The CPI result was a little higher than had been expected by the RBA and certainly the view of most economists.

“Following that, if [inflation] increases it makes it more likely that the RBA will stick with the cash rate where it is for longer, or possibly even need to implement one or two more rate increases later in the year.

“They won’t want to increase the cash rate unless it's really necessary,” he said. 

Big Four banks update their interest rate cut predictions 

While economists at the Big Four banks tend to agree that the cash rate will remain at 4.35% in May 2024 we’ve already seen interest rate predictions from some of the Big Four move from a September cut to a November cut. 

How to lower your home loan repayments 

Borrowers desperate for rate relief, who are watching the expert predictions get further and further away, still have a couple of options to lower their home loan repayments, says Marshall. 

“The best thing for everyone to do is to see what rate you're on now, see what rate you could be on by having a look at what other lenders are offering, and then thinking about whether that sort of reduction in interest is worth you putting a bit of time into refinancing your loan.

“And if you don't want to do that, at least have a chat with your current lender and say, ‘Hey, I've seen a loan that's a bit lower than what you're offering. And I'm thinking about going to that lender.’ See if you can leverage a rate cut out of your existing lender that way.” 

When you compare home loans, keep an eye out for features like offset accounts and redraw facilities, which can help to reduce the amount of interest you pay. Some lenders offer them free of charge, while others have a small fee. 

But Marshall also says those who have paid off a fair chunk of their home loan could benefit from taking a look at their loan-to-value ratio (LVR), as a means of reducing their interest rate.

“The other possibility for some people might be, if you've had your loan for a while and you've decreased your loan-to-value ratio, you may be able to get a better deal from a different lender by going through that refinancing process.

“If you start off paying interest rates at 80% LVR or above, and if you're down to 60% now, a lender might find you a less risky borrower and be happy to give you a better rate.

“So there are a couple of lenders that will do that automatically for you during the life of your loan, but most lenders don't.” 

Start off by checking out the latest refinance home loan rates, or browsing through the featured home loans below to see what’s on offer.