Will the RBA hike the cash rate in August 2023? CBA, ANZ, NAB, and Westpac home loan predictions

People loading another red block onto a red pyramid

In an astonishing pivot, the Reserve Bank of Australia (RBA) made a quiet July by holding the official cash rate at 4.10%. Home loans cooled their interest rate rush somewhat, much to the relief of borrowers. 

But another interest rate decision looms on the horizon. With the release of new quarterly inflation figures, the RBA must decide whether interest rates have risen high enough or if household budgets need another kick. 

Let’s break down predictions for the RBA’s 1 August meeting.

Will the RBA hike interest rates in August? CPI could be the decider

Person looking back at spiking CPI index

In the year to June 2023, headline inflation clocked in at 6.0% – the lowest figure since September 2021 and a slowdown far steeper than expected. This marks the second consecutive quarter that inflation has fallen, a phenomenon called ‘disinflation’. 

So the good news? The RBA is successfully wringing inflation out of the economy. The bad news? 6% is still far from the RBA’s ideal 2% - 3% target. 

According to RBA governor Philip Lowe, whose term ends in September, inflation must come down no matter what, or the consequences could hurt Australians far more than costly home loans.

“Our job at the central bank is to make sure that this period of high inflation is only temporary. It is important that we are successful here,” Lowe explained in a speech in June. 

“High inflation is corrosive and damages our economy. It erodes the value of money and savings, puts pressure on household budgets, makes it harder for businesses to plan and distorts investment. It makes us all poorer and hurts people on low incomes the most.”

But with inflation lower than expected, has the RBA done enough to ensure the slowdown sticks? The last few cash rate decisions have all been close calls: the RBA surprised with every hike or hold. 

“The RBA is very focused on getting inflation down,” says Mozo banking expert Peter Marshall.

“The only thing they can do about inflation is to raise interest rates. So if they think there’s a risk inflation is not reducing as quickly as they would like, they will hit the interest rate button.”

Marshall warns that one more 0.25% rate hike is likely in August. It could be the final stomp required for inflation to come down and stay down. 

“There’s plenty of hard information the economy is coming to a very fast halt and going into reverse within the next few months,” says Marshall. “I would find it really hard to believe the RBA thinks the mountain of negative data appearing right now can be ignored for long.”

“So the logic may be that one more rate rise will do the trick.”

Commonwealth Bank, Westpac, NAB, and ANZ rate predictions for August 2023

Man walking diverging straight and curly paths.

ANZ finds itself the most dovish of the big banks ahead of the August RBA announcement. ANZ projects an extended hold into 2024, when rates may eventually come down, meaning the June rate hike was the final one. 

Commonwealth Bank and Westpac maintain the middle ground by predicting one more rate hike in August, the last for this cycle. This would mean a cash rate peak of 4.35% until 2025. CBA has had the most accurate forecasts for each RBA decision this year, while Westpac has consistently favoured aggressive rate hikes. 

Big Four Bank cash rate predictions – 28 July 2023

August 2023
September 2023
ANZ
Nil
-
CBA
4.35%
-
Westpac
4.35%
-
NAB
4.35%
4.60%

NAB, on the other hand, leans the most hawkish. The big bank reckons there will be two more 0.25% additions in August and September. This would push the final cash rate to an eye-watering high of 4.60%. With a low quarterly inflation figure, however, this scenario seems less and less likely.

Loan details

Rate change

Repayment change if rates go up

When will interest rates come down?

Man leaps down red blocks.

Latest figures from the RBA suggest that inflation won’t fall to the target band until 2025, though the big banks are more optimistic about a slowdown by 2024. 

Interest rates will only come down when inflation does, so unfortunately, this means home loans may stay costly for another two years. On the bright side, savings account interest rates will remain attractive longer — every raincloud, as they say. 

The RBA will go through some shake-ups in 2024, however. New governor Michele Bullock will have taken over from Philip Lowe, and the RBA will meet less frequently, which could spread out interest rate decisions and delay the pace of any rate hikes, holds, or cuts. 

Marshall warns the changes won’t affect the decision making process: the RBA may retain a tightening bias so long as inflation proves a threat. 

“I don’t think replacing Philip Lowe is going to change things enormously,” he explains. 

“The RBA will still make its decisions based on the views of a group of people. It’ll be a slightly different group of people, so we may get some different decisions, but it’s not going to see an abrupt, ‘Oh, no, we’ve been doing the wrong thing all these years.’”

Will the RBA cause a recession?

Man plummets down recession hole between red blocks.

A significant criticism of the RBA’s aggressive tightening of monetary policy is that there’s a risk the central bank could overdo it. If rates go too high too fast, disheartened and mortgage-stressed Australians may close their wallets altogether, stop spending, and plunge Australia into a recession. 

A recession is another worst-case scenario the RBA tries to avoid. If one were to happen, unemployment would rise, and the cost of living would become unaffordable for many. 

At the moment, employment remains strong and tight, and this is usually the most reliable bellwether for a recession. If people start losing their jobs and businesses start closing, it cuts off the flow of cash in the economy and causes the contraction economists watch out for. 

Recessions are unavoidable parts of the business cycle, of course, and we may experience a minor one in the recovery from inflation. But for now, the danger seems distant.

What can home loan borrowers do about costly mortgage repayments?

Person shoulders heavy red block.

Need help with mortgage repayments? Your window of opportunity to refinance may be closing. 

Refinancing becomes less and less tenable with every rate hike. This is because rising interest rates not only squeeze and stretch budgets, which can hurt your borrowing power, but high rates also push up serviceability test thresholds. 

Lenders partially assess creditworthiness by evaluating whether borrowers can pay interest rates up to 3% higher than the number they’ve applied for. So if you’re struggling to afford 7% rates and want to refinance to 5%, a mortgage lender will test your finances at rates as high as 8% – a rate which may be too high for you to finance. 

Three of the big four banks have lowered their stress tests because of this problem. Now, instead of 3%, eligible refinancers applying to CBA, NAB, and Westpac may only be assessed at rates 1% above the one they want.  

But your refinancing application will still need to show a good credit score, genuine savings, and a low debt-to-income ratio to be successful, all of which may have gotten harder with the cost of living so high. If you can’t refinance, you risk becoming a mortgage prisoner

Instead, jailbreak your mortgage before matters get out of hand. Some crucial early steps you can take on the road to refinancing are:

  • Lowering your spending and credit card limits. 
  • Clearing excess debt, especially credit card and personal loan debt. 
  • Calling your lender to negotiate a lower interest rate. 
  • Getting a property valuation done to asses your home equity
  • Comparing home loans to see if you could switch and save. 

If you’re already preparing a refinancing application, check it for these red flags to ensure you aren’t giving the wrong impression.

Compare home loans below. For award-winning picks from 2023, check out our best home loans hub.

Home loan comparisons on Mozo

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Last updated 25 June 2024 Important disclosures and comparison rate warning*
  • 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.

  • 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.

  • 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.

  • 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.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • 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.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    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.

  • 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.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • 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.

  • Discount Great Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    • over $150k
    Interest rate
    6.19 % p.a.
    Variable
    Comparison rate
    6.21 % p.a.
    Initial monthly repayment
    $3,059
    Go to site

    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^.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    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 $750,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

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.

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

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