How high will mortgage rates go in 2023?

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The nation’s borrowers are feeling the pinch as the Reserve Bank’s war against inflation translates to higher home loan rates. But just how high are rates — and your mortgage repayments — expected to go?

Right now, the average variable rate among lenders we track sits at 5.69% p.a. while the average big bank variable rate is a bit higher at 6.24% p.a. 

The table below shows what those rates might look like once the RBA’s tightening cycle ends, based on forecast profiles from the major banks.

Average mortgage rate based on big bank forecasts

BankCash rate peakAverage variable rateAverage Big 4 variable rate
ANZ3.85%6.44% p.a.6.99% p.a.
CommBank3.35%5.94% p.a.6.45% p.a.
NAB3.60%6.19% p.a.6.74% p.a.
Westpac3.85%6.44% p.a.6.99% p.a.

Will this affect how much I can borrow?

When you apply for a home loan, your lender determines how much you can afford to borrow by taking into account your income, expenses, and the sum of repayments on loans of various sizes.

As rates go up, the amount of money the bank will be willing to lend you decreases in size. That’s because you’ll be directing a greater portion of your income towards servicing your loan than you would if rates were lower.

It also bears mentioning that when banks determine your serviceability, they add a buffer of around 3% to your mortgage rate. This is to account for any interest rate increases in the future.

If the bank won’t lend you as much as you want, you can boost your borrowing power by either increasing your income or saving up a larger deposit. Otherwise, consider setting your sights on a cheaper property.

Will home loan interest rates go down?

Mortgage rates tend to move in line with the cash rate. So whether the cash rate goes up or down, we can generally expect the change to flow through to borrowers on floating rates.

Interest rates might be heading up at the moment, but they aren’t expected to remain elevated for much longer. Economists at CommBank believe the RBA will be forced to start cutting rates in the second half in 2023. 

If those expectations are borne out, borrowers would only have to endure another year of high rates before the banks start providing relief in the form of cuts. 

For information on interest rates and lending trends, head over to our home loan statistics page. And if you’re in the market for a home loan, visit our home loan comparison page, or browse the selection below.

Home loan comparisons on Mozo

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Last updated 22 July 2024 Important disclosures and comparison rate warning*
  • Discount Great Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%, over $150k

    interest rate
    comparison rate
    Initial monthly repayment
    6.04% p.a. variable
    6.06% p.a.

    An easy to use Home Loan with no establishment fee and no monthly or annual fees. Minimum deposit of 20% is required. Mozo Experts Choice Awards - Investor Home Loan Award 2024^.

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    Details
  • Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    6.25% p.a.
    fixed 3 years
    6.20% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $10,000,000.

    Compare
    Details
  • Low Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.20% p.a.

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

    Compare
    Details
  • Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR 70-80%

    interest rate
    comparison rate
    Initial monthly repayment
    6.14% p.a. variable
    6.14% p.a.

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

    Compare
    Details

* 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.

^See information about the Mozo Experts Choice Home Loan Awards

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