Are interest rates going up? New forecasts from Westpac, NAB, ANZ, and CommBank

Key Points

• The Big 4 Banks do not expect any rate rises in 2024. The cash rate has peaked at 4.35%.
• The RBA may start cutting interest rates in November to December 2024.
• The next RBA interest rates announcement is 6 August 2024.
• A technical recession is possible in 2024, but not looking likely at the moment.

Over the last two years, the home loan market has been rocked by a series of rate hikes thanks the Reserve Bank of Australia (RBA). The central bank has been chasing runaway inflation with tighter monetary policy.

Experts from the Big Four banks agree the dust will settle with the current official cash rate of 4.35%. The RBA has certainly maintained a tightening bias, though it has softened its language considerably.

There is better news, too. As the economy recovers from disruptions, interest rates may come down in 2024, even as early as November.

Let's break down the predictions below.

Any RBA decision to raise official interest rates in 2024 will be strongly data-dependent, since the cash rate is already in deeply restrictive territory.

This means economic indicators such an employment, household spending, and wage growth (a.k.a. "services inflation") will guide all RBA decisions in 2024.

At the moment, there is plenty of evidence that the economy has slowed down and that inflation has begun to moderate. Unemployment has started to uptick while wages growth has picked up the pace. This supports an argument for no rate hikes in 2024, leaving the cash rate at a peak of 4.35%.

Interest rate forecasts for 2024

The RBA held the cash rate at 4.35% in June, which experts predict will remain the same on 6 August 2024 when the RBA next meets.

Big Four Bank RBA interest rate forecasts (18 June 2024)

In the meantime, mortgage stress will continue to rock the housing market. Even if we have seen the last cash rate hike decision, borrowers will keenly await a time when rates come down.

Will there be a rate cut or recession in 2024?

If the economy slows down too much, the RBA may choose to cut the cash rate. This is especially critical if they're trying to ward off a recession. However, with Australian employment still going strong, the alarm bells aren't quite ringing yet. 

What's more, the Big Banks estimate that inflation will ease off in late 2024 and early 2025, potentially incentivising the RBA to relax its iron grip on the cash rate and pass along a series of cuts anyway.

RBA cash rate cut forecasts from Westpac and NAB (June 2024)

CBA, Westpac, and NAB predict that interest rates will come down in 2024 at the earliest and 2025 at the latest, potentially bringing the cash rate into neutral territory of around 3%, while ANZ researchers suggest the cuts may be further down the road. Either way, there may be mortgage relief on the horizon.

However, with the cash rate currently resting at 4.35%, home loan borrowers will continue watching the RBA for future moves.

An era of rate hikes has its advantages – if you know how to lean into monetary policy – and there are plenty of great strategies you could take for keeping your mortgage within your budget. So roll up your sleeves: it’s time to get proactive. 

If you already have a mortgage:

• Get an offset account – and fill it up. While more common with variable home loans, an offset account could save you bundles on interest. 
  
• Compare interest rates, and if you find something better, refinance. If you’re in a position to refinance, comparing what’s out there could clue you into deals with better rates, features, and support. 
  
• Climb aboard the savings train. Home loan rates may be up, but thankfully, so are savings accounts. If you’re considering making the switch, you could start by comparing these high interest rate savings options.

If you’re looking to buy property:

• Let the government help you out. Every state in Australia has first home buyers grants and schemes aimed at improving access and affordability. On a national level, the Labor government has also announced its new Help to Buy scheme.
  
• Show lenders you’re a good bet. Lenders aren’t keen on approving applications from risky borrowers, so if you can, take steps to pay off your debt, save for a bigger deposit, and be mindful of your credit history.
  
• Walk into the auction with your head held high. High interest rates cool competition at auctions, so sellers may be more willing than you think to privately negotiate a price – and accept lower offers than normal. So if house prices have fallen in your area, the ball is in your court.

How much will $1 million buy in Australia's capitals? We compared the market so you don't have to. Compare low rate home loans in the table below.