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

Key Points

  • The RBA left the cash rate unchanged at 4.35% during the latest monetary policy meeting on 9-10 December 2024.
  • Interest rates will likely decrease when inflation reaches the 2% to 3% RBA target band, predicted for May 2025.
  • Home loan interest rates have already started to drop, including some Big Four rates. 
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 experiencing 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?

TL;DR: It's unlikely. 


Back on 6 August 2024, after announcing yet another cash rate hold, Governor Michele Bullock told the press that the RBA doesn’t expect to make any cuts in 2024. 

“I think what the Board’s feeling is that the market path at the moment is pricing in interest rate reductions by the end of this year. 

“I think the Board’s feeling is that the near term, by the end of the year and the next six months, given what the Board knows at the moment and given what the forecasts are that that doesn’t align with their thinking about interest rate reductions at the moment,” said Bullock. 

The same sentiment now echoes among economists at the Big Four banks, including CommBank who pushed its prediction back (again) from December 2024 to February 2025.  

Unfortunately, this means mortgage rates are likely to stay high until we finally hit the RBA’s inflation goal, which is a flexible target of 2-3% per year. 

The October Consumer Price Index (CPI) data – a measure of Australia’s inflation rate – recorded trimmed mean inflation at 3.5% in the year to October 2024. This means inflation increased from the previous month (3.2%) and has returned to where it was in August 2024. 

These inflation figures have prompted experts to reassess their forecasts, including the Big Four banks. 

RBA cash rate cut forecasts from Westpac, NAB, CommBank & ANZ (4 December 2024)

Dec 24
Mar 25
Jun 25
Sep 25
Dec 25
Mar 26
Jun 26
Sep 26
Dec 26
Westpac
4.35%
4.35%
4.10%
3.60%
3.35%
3.35%
3.35%
3.35%
3.35%
NAB
4.35%
4.35%
4.10%
3.85
3.60%
3.35%
3.10%
3.10%
3.10%
CommBank
4.35%
4.10%
3.85%
3.60%
3.35%
N/A
N/A
N/A
N/A

Economists at ANZ predict the RBA’s first cut will come in May 2025, followed by another cut in August 2025, to take the cash rate down to 3.85%. 


NAB pushes back cash rate cut prediction to May 2025

Updated: Friday, 15 November 2024

Back on 30 September 2024, NAB pushed its RBA rate cut prediction forward to February 2025. Now, citing a hot labour market, NAB forecasts the first cut to come in May 2025, followed by a steady flow of one cut per quarter until the cash rate settles at 3.10% by mid-2026. 

This cut-call comes off the back of NAB's 40 basis-point interest rate cut on its Base Variable Home Loan, now 6.44% (6.48% p.a. comparison rate*), on 14 November 2024. 

Is the proof in the fixed-rate pudding?

Now that home loan lenders have sensed a lull in the rate-hike cycle, many have started cutting their fixed and variable rates – including some of the Big Four.

Mozo banking and rates expert, Peter Marshall, says these fixed-rate cuts could indicate the conviction the Big Four have in their interest rate predictions. 

"Fixed rates are shaped by lenders’ forecasts of where interest rates are headed,” he said.  

“Since these rates stay the same for the fixed rate term, and banks aim to balance the returns from loans with the cost of deposits, there’s a chance fixed rates will be higher than variable when the cash rate drops.

“Choosing a fixed rate today could be tempting, but borrowers should also consider the likelihood of upcoming rate cuts by the RBA before making their decision."

The Big Four home loans that have moved in recent weeks include NAB’s Tailored Home Loan (Fixed), Westpac’s Fixed Options Home Loan, and CBA’s Fixed Rate Home Loan (Wealth Package), variable rate Extra Home Loan, and Standard Variable Rate. 

But fixed-rate cuts aren’t only coming from the Big Four. There have been a whole host of banks and home loan lenders cutting interest rates this month, including Newcastle Permanent, Great Southern Bank, Macquarie, MOVE Bank, and ME.

How can homeowners save mortgage costs?

After 13 cash rate hikes, Aussies have been forking out thousands of dollars more on average than they were previously, with borrowers who have larger loan balances affected the worst. 

Home loan amount ($)
Monthly repayment (May 2022)
Monthly repayment (December 2024)
$350,000
$1,663
$2,414
$500,000
$2,376
$3,448
$750,000
$3,564
$5,172
$1,000,000
$4,753
$6,896
*Based on 25 year terms, Owner Occupier Principal & Interest, LVR <80%. Average variable rate of 3.02% p.a. as of May 2022, and 6.73%p.a. as of 4 December 2024.

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.

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can compare more home loans here.
Last updated 11 December 2024 Important disclosures and comparison rate warning*
What are your home loan needs?

Your loan-to-value ratio (LVR): 50%

Loan amount and LVR will affect interest rates.

  • Promoted

    Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.30 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Convenient offset account. 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.

  • Promoted

    Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Promoted

    Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.08 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    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.

  • Promoted

    Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Promoted

    Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Promoted

    Budget Home Loan

    • LVR <80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.07 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Enjoy a discounted variable home loan from IMB. Get up to $4,000 cashback (T&Cs apply). Life-of-loan discount off IMB’s standard variable interest rate. Unrestricted additional repayments. Free Internet and Mobile Banking redraws (T&Cs apply). No monthly fees to pay. Up to a 30 year loan term. Split loan available. No offset account.

  • Promoted

    Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.08 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    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.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.30 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Convenient offset account. 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.

  • Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <95%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.34 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.

  • Flex Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    5.79 % p.a.
    Fixed 2 years
    Comparison rate
    6.27 % p.a.
    Initial monthly repayment
    $2,931
    Go to site

    Competitive Fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Budget Home Loan

    • LVR <80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.07 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Enjoy a discounted variable home loan from IMB. Get up to $4,000 cashback (T&Cs apply). Life-of-loan discount off IMB’s standard variable interest rate. Unrestricted additional repayments. Free Internet and Mobile Banking redraws (T&Cs apply). No monthly fees to pay. Up to a 30 year loan term. Split loan available. No offset account.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Flex Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.33 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitive variable rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

Showing 11 results from 426 home loans. Use the filters to see more
image of houses

Want free expert advice on your home loan?

Whether you're looking to purchase a new home or refinance your existing loan, our friends at Aussie can help!

Learn more

* 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.