How high will interest rates go in 2024?

By Niko Iliakis and Evlin DuBose
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Key Facts

  • Interest rates probably won't rise anymore in 2024.
  • Rate cuts could happen in November 2024 (at the earliest).
How high will interest rates go; rising graph next to piggy bank

The thirteen Reserve Bank of Australia (RBA) rate hikes since May 2022 have made the last two years gruelling for anyone with a home loan. 

Luckily, many economists believe the cash rate has peaked at 4.35% in 2024.

While uncertainty seems to be a feature of today’s economy, ANZ, CommBank, NAB, and Westpac have some idea of where things are heading. Let's take a look at their economic forecasts below.

Australian interest rate forecast for 2024

Interest rates have most likely peaked at 4.35%. Currently, the odds of a rate hike in 2024 are quite low.

The Big Banks warn, however, that just because we've reached the top of this cycle, it doesn't mean rates will come down immediately. Interest rates will have to stay high until inflation comes down.

Big four RBA cash rate peak predictions for 2024 (7 May 2024)

BankRate Peak
CBA4.35%
ANZ4.35%
Westpac4.35%
NAB4.35%

Inflation has proved remarkably stubborn. Growth forecasts put inflation hitting the top of the RBA's target band of 2% - 3% late next year, which could bring rate cuts.

As a result, the Big Banks seem to be in agreement that the earliest we'll see the first cut come is November 2024. 

Home loan interest rate forecast

Following the RBA’s rate rise decisions in 2022-2023, many lenders passed on the full hike to variable rate customers without much hesitation. This is especially true of the Big Four Banks, who each swiftly lifted rates mere days — sometimes mere hours — after each RBA decision. 

Each rate hike translates to higher monthly repayments, and with so many fixed rate terms set to expire in the coming months, analysts and policymakers are on the lookout for signs that households won’t be able to cope.

The table below shows just how far variable home loan interest rates have climbed thanks to RBA rate hikes.

How have rate hikes affected property prices?

The immediate effect of tight monetary policy is a decrease in borrowing power. This drove down demand significantly in 2022 as prospective borrowers found themselves either priced out of the market or forced to look at cheaper properties than they’d wish. As a result, property values fell -7.5% in 2022.

However, according to property research firm CoreLogic, property values in Australia have regained much of their lost territory, rising 8.1% in 2023 thanks to a combination of high demand and tight supply. Values are forecasted to keeping growing into 2024 by around 5%.

RELATED: What is Australia's average mortgage size?

The high rate environment has also tested the rental market, as a limited supply of rental homes and mortgage-stressed landlords has spiked average rental values by well over 10% in many capital cities. Higher rents can make it harder to save for that crucial first home loan deposit.

For more information, visit our RBA interest rate tracker page. And if you feel that refinancing is in order, be sure to visit our home loan comparison page, where you’ll be able to filter your search by rate and type.

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Last updated 20 September 2024 Important disclosures and comparison rate warning*

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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