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 - last updated 3 March 2024

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  • Mozo Expert Choice Badge
    Home Fixed Rate

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    5.80% p.a.
    fixed 3 years
    5.91% p.a.

    Enjoy the security of a competitive fixed interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply). Mozo Experts Choice award winner.

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    Details
  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

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  • Offset Home Loan

    Package, Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.40% p.a.

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

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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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