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

Collage of a woman hanging off a graph line

Despite hiking the cash rate an impressive 3.00% over the course of 2022, the Reserve Bank of Australia has yet to win its war against inflation. 

But while the rate rises haven’t dampened consumer price growth, they have smothered property values and home loan borrowing power, since variable mortgage interest rates shift in line with the cash rate. These effects have made rate rises a significant cause of the rising cost of living.

Relief may not be in sight quite yet, with CBA, Westpac, NAB, and ANZ all budgeting a 0.25% hike in February, but a slowdown to the pace of rate hikes may come sooner than thought.

Let’s unpack rate predictions for the 7 February RBA meeting.

Westpac, CBA, NAB, and ANZ rate predictions for February 2023

Collage of a woman stacking red blocks.

Headline inflation clocked in at an alarming 7.8% between December 2021 and 2022, far outside the RBA target band of 2 - 3%, but a little under the 8% the RBA predicted. With such runaway growth, most economic pundits agree the RBA will feel it has no choice but to move the cash rate again in February. 

While last year saw the central bank deliver several hefty 50 basis point hikes, it pivoted in October to a calmer, more measured approach: 25 bp apiece. All four big banks predict the RBA will make another 25 bp move on 7 February, lifting it to 3.35%. 

This movement would then cascade into another round of rate increases to variable home loans, especially for customers borrowing from the big four.

However, while another movement is almost certainly on the cards for early 2023, there’s disagreement over whether we’re nearing the ‘terminal rate’, also called the cash rate peak. In theory, the RBA will hold the cash rate at this ideal summit until inflation eases then lower it back again with a series of cuts. 

But with inflation still rip-roaring through the economy, economists argue we haven’t yet reached the top. Interest rates will go higher in 2023, but how much higher will they go?

How high will rate hikes go in 2023?

Collage of a woman trying to pull in a red colour, like the RBA reigning in inflation.

When justifying the pace of rate hikes, RBA governor Philip Lowe has consistently cited high employment, consumer spending, and household savings as crucial safety buffers. In his view, these all allow borrowers to absorb the additional interest on their mortgage repayments without driving them into mortgage stress, or the worst case scenario: arrears. 

However, many Australian households have fallen into mortgage stress (meaning they’re spending more than 30% of their income on repayments). The more people fall behind on their home loans, the more likely they are to close their wallets altogether and plunge the economy into recession.

Indeed, CBA has issued a per capita recession warning for later in 2023 if rate hikes go too far. 

This warning hinges on whether the cash rate peaks at 3.35% in February or if there’s further still to go, as NAB, ANZ, and Westpac believe. (CBA concedes there’s a chance the RBA may hold off on a decision in February in favour of moving in March instead, but either way, it pegs 25 bp as the final rise for this tightening cycle). 

ANZ and Westpac, on the other hand, believe that the cash rate will peak at 3.85% by May 2023. NAB finds the middle ground with a 3.60% peak in March. All paths set out by the big banks include hikes made in 25 bp increments.

Cash rate peak predictions from the big banks (31 January 2023)

February 2023
March 2023
April 2023
May 2023
CBA
3.35%---
NAB3.35%3.60%--
ANZ3.35%3.60%No decision3.85%
Westpac3.35%3.60%No decision3.85%

If CBA’s predictions hold true, February’s decision could be the last we see for the year – at least until the RBA releases the brakes with a rate cut. 

However, if NAB, ANZ, and Westpac are correct, overly indebted households could be in serious trouble soon.

Loan details

Rate change

Repayment change if rates go up

Will the RBA cut the cash rate in 2023?

Collage of a woman peering back at a series of blue graph blocks.

The last time the RBA slashed the cash rate was in November 2020, bringing it to an all-time low of 0.10%. Lowering the cash rate encourages cash flow in the economy and stimulates activity, and is usually done in response to decreased consumer spending levels, dragging inflation (lower than 2%), or a recession. 

Consumer spending has already dropped significantly in the wake of the silly season, with retail trade reporting its first monthly fall for the year in December 2022. 

Unemployment has also begun to tick up, ever so slightly, and this bellwether is critical to watch. Households can afford rate hikes and inflation so long as they have a steady stream of income: without it, they’re sitting ducks in a storm. 

In response to these metrics, CBA expects 50 bp worth of rate cuts later in 2023, right when inflation is projected to ease off. These rate cuts will likely continue into 2024 as the economy levels out again. While the big bank doesn’t specify which months we’ll see the cuts, it suggests they could start sometime in Q4, which begins in August 2023 – only eight months away.

NAB lays out a more concrete path for rate cuts, starting in December 2023 and continuing into 2024.

December 2023February 2024March 2024April 2024May 2024June 2024
NAB3.60%3.35%3.10%NilNil2.85%

This would ultimately shave 75 bp in a year and half’s time.

How to prepare for interest rate changes in 2023

Collage of two people on a see-saw holding either one big block or three smaller blocks.

Not every suburb experienced a value decline in response to rate hikes: a few have even boomed with first home buyers. For the savvy investor seeking capital growth, it seems there are still plenty of places to check out (including these hottest 100 suburbs).

Borrowers, in the meantime, will likely hope for rate cuts instead. But don’t overlook the rate rises between now and then. If you’re struggling with your repayments, some helpful strategies to take include:

  • Making use of an offset account. 
  • Making free extra repayments (if you can).
  • Calling up your lender and negotiating for a lower interest rate. 

And if these aren’t good options, it could be time to ask yourself about refinancing

Compare home loans below.

Home loan comparisons on Mozo

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Last updated 21 June 2024 Important disclosures and comparison rate warning*
  • Unloan Variable

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

  • Basic Home Loan

    • Owner Occupier
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    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
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    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.

  • 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
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    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

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    • 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
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    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%
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    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
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    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

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    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.

  • Basic Home Loan

    • Fixed
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    • LVR<70%
    Interest rate
    6.25 % p.a.
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    Comparison rate
    6.20 % p.a.
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    $3,079
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    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.

  • Fixed Rate

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    • <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.

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