Interest rate hike will come sooner than expected, says CBA

Economists at the Commonwealth Bank have brought forward their rate hike forecasts, tipping the Reserve Bank of Australia will lift the cash rate above its current historic lows in November 2022. 

“We have pencilled in an increase of 15 [basis points] which would take the cash rate to 0.25%,” said CBA head of Australian economics, Gareth Aird.

The major bank sees a further increase of 0.25% in December 2022, followed by another three 0.25% increases in the first, second and third quarters of 2023. That would put the cash rate at 1.25% by September 2023.

Among lenders we track, the average variable home loan rate for owner occupiers making P&I repayments currently sits at 3.27% p.a. Assuming lenders hike rates in line with the RBA, this will jump up to 4.42% p.a.

For the average borrower paying off a loan of $500,000 over 25 years, that could translate to an extra $315 in monthly repayments each month, or $3,780 over the year.

RELATED: Are tighter lending conditions on the way?

Local interest rate traders had tipped the RBA would move sooner than planned after the latest round of jobs figures showed unemployment dropped to 5.1% in May.

Underemployment also fell to 7.4%, the lowest it has been since January 2014 and only 0.4% below pre-pandemic levels.

CommBank is now the third major bank to challenge the RBA’s guidance that interest rates will not rise until 2024. 

ANZ economists believe the RBA will pull the rate hike trigger in late 2023, while Westpac forecasts a March 2023 move.

Despite the momentum in the economy, wages growth remains chronically weak. Aird warns that a swelling of the labour market supply once international borders open could subdue wages further.

“We believe that the RBA cannot achieve their objectives of full employment and inflation ‘sustainably in the target’ without the assistance of the Commonwealth,” he said.

“More specifically, fiscal settings need to remain stimulatory and net overseas immigration cannot catapult back to strong pre‑COVID levels if wages growth is to remain at 3% per annum or above.”

To work out how much you could be paying if rates go up, use our home loan repayments calculator. And for more information on property and lending trends, browse our home loan statistics page.


Home loan comparisons on Mozo - last updated 4 March 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • 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.

  • 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.

  • 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.


* 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

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.