Home loan watch: when will interest rates finally come down? Expert forecasts explained

By Jack Dona and Evlin DuBose
Fact Checked
Advertiser disclosure

Key Points

  • The next cash rate decision is on 6 August 2024.
  • Official interest rates will come down when inflation reaches the RBA target band of 2% to 3%, most likely in late 2024 to early 2025.
  • Inflation is gradually decreasing in 2024.
  • Home loan interest rates have already started to drop.
Collage of a woman walking down a descending graph line.

The Reserve Bank of Australia (RBA) maintains that its number one enemy is inflation. If inflation stays high, so will home loan interest rates.

But with many households on the edge of mortgage stress, more rate rises in 2024 are the last thing Australians want. So instead, let’s think long-term, optimistically.

When will interest rates finally come down?

Will home loan interest rates go down in 2024?

Collage of a woman peering over a red ledge into the white abyss.

Inflation is predicted to slow down to the RBA's target band in late 2024, unless there are any upsets. Until then, the RBA will hold the cash rate steady and keep monetary policy as tight as possible for as long as possible. 

Unfortunately, this means mortgage rates will stay at atmospheric heights until we finally hit the RBA’s inflation goal.

Once we do, the central bank will steadily unwind the cash rate to get the economy moving again. Variable home loans will come down significantly and monthly mortgage repayments will ease, which could make servicing a mortgage easier for many Australians. 

RBA cash rate cut forecasts from Westpac, NAB & CommBank (28 June 2024)

Jun 24Sep 24Dec 24Mar 25Jun 25Sep 25Dec 25Mar 26Jun 26
Westpac4.35%4.35%4.10%3.85%3.60%3.35%3.10%––
NAB4.35%4.35%4.35%4.35%4.10%3.85%3.60%3.35%3.10%
CommBank4.35%4.35%4.10%3.85%3.60%3.35%3.10%––

ANZ and NAB rule out cash rate cuts in 2024 

ANZ became the first of the Big Four banks to forecast the RBA won't cut rates until 2025. After a rise in trimmed mean inflation in the May monthly CPI, NAB has reacted by pushing back its forecast to May 2025, which will be followed up with quarterly cuts until mid-2026.

There is some good news. Now that home loan lenders have sensed a lull in the rate tightening cycle, many have begun cutting their fixed and variable rates. While rates are still high, they're not as high as they have been. So, unless something else happens, we are likely passed the mortgage peak. 

The timing of rate cuts has a lot of ‘if’, however. Even the most hawkish estimates spread the inflationary slowdown to somewhere between 2024 and 2025 – a full three years after it first took off.

Since our brand of inflation has been primarily supply-side, not demand-driven, quite a few things outside the RBA's control have to go right first.

Inflation is like acceleration on a speeding car. Our driver, the RBA, will have to keep its foot on the brake (the cash rate) long enough to slow us to a nice pace, but not long enough to stop us cold. They also have to slow us down without crashing us (i.e. cause a recession).

If we hit a recession in 2024, then we could expect the RBA to cut interest rates ASAP, but at the moment, a recession isn't looking likely. Unemployment is going up, but by economic standards it's "normalising" after a few years of more Australians having jobs than usual.

In short? Expect interest rates to stay relatively high until we ease off the brake, most likely somewhere in early 2025, if not late this year.

How can homeowners save mortgage costs?

While interest rates stay up, mortgage repayments will, too. If you’re struggling with the loan you already have, making lifestyle changes, calling your lender, and investigating whether to refinance can all be good options for handling mortgage pain. The best path for you will depend on your situation. 

However, if you’re hoping to buy a home despite the inflationary environment, consider these three ways to break into the property market – all while checking your application for these lending red flags. 

Compare low-interest rate home loans below.

Home loan comparisons on Mozo

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Last updated 27 July 2024 Important disclosures and comparison rate warning*

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image of houses

Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

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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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