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

We’re nearing the end of the tightening cycle – and home loan lenders know it. Last month, the Reserve Bank of Australia’s surprise decision sent shockwaves through an unprepared market. Mortgages jumped far more than the expected 25 basis points, while property prices remained surprisingly buoyant.

But despite the RBA’s reminder that official interest rates may have further to go, experts are in near-universal agreement with a hold in June.

So why is the RBA’s 6 June decision already decided? Let’s unpack the rate forecasts.

Perhaps the strongest argument for the RBA to hold the cash rate steady in June is that no meaningful data has emerged suggesting it do otherwise. The central bank watches inflation indicators – especially the quarterly consumer and wage-price indices – with a hawkish eye. With no new information to go off of, the RBA may decide to wait and see.

“I don’t think the RBA will move again in June,” explains Mozo banking expert Peter Marshall. “It’s possible they will in July or August – in fact, it’s quite likely that in July or August, we’ll see another rate rise. There just hasn’t been any meaningful data released around employment, inflation, or things like that for the June meeting. 

“The RBA’s probably at a point where they want to get more information about the increases they’ve added to rates this year. They will have to be aware that they’re at or very close to the peak of this rate cycle, and while they’ve said they expect rates will have to go up more, I think they’ll be getting ready to make the call that, ‘No, no more is needed.’”

Indeed, this pause forecast aligns with the views of Australia’s Big Four banks, who have spearheaded the debate ahead of each RBA meeting. 

Commonwealth Bank believes we’re already at the cash rate peak – pending any surprisingly outrageous inflation data in July, which would justify a move in August. Till then, this would leave the cash rate at its current level: 3.85%. 

However, the other three big banks – Westpac, NAB, and ANZ – lean higher. 

Westpac and NAB predict a 4.10% peak in August, meaning the next (and last) hike we see for this cycle will be in two months' time. 

ANZ skews the most hawkish, with a 4.35% cash rate peak in August. This could mean two more 25 basis point decisions in the next few months or one 50 bp hike in August. However, the latter scenario is highly unlikely, given the RBA’s preference to take baby steps rather than giant, market-shocking leaps.

Big Four Bank cash rate predictions – 2 June 2023

Of the four banks, only CBA correctly predicted last month’s RBA decision. 

“The May rate rise surprised a lot of economists, but I thought the RBA probably did the right thing,” says Marshall. 

“Easing off too soon would have sent the wrong message. People were basically ignoring where rates were now and getting on with borrowing lots of money. So the RBA is trying to reverse that, talk things down a bit – maybe that will have some effect. But I think they will be waiting to see at the moment.”

Refinancing has dulled from its March peak, but Australians still switched more than $19.3 billion worth of mortgages to a different lender in April – up 14.2% from a year ago. 

For those not trapped with their home loan, finding a competitive rate has become a lifeline to the mounting pressure of 3.75% worth of RBA rate hikes.

Homeowners aren’t the only ones affected, however. Property investors have largely passed along the rate hikes to renters, creating some of the most eye-watering rental increases on record.

But while landlords can seek additional relief in rental property tax breaks, their tenants can’t, which makes the End of the Financial Year (EOFY) a critical time to save. 

“July marks the commencement of a fresh chapter, allowing you to reimagine your financial management strategies,” says ubank’s Andrew Morrison.

“[Simple], yet impactful changes will save you from future headaches and ensure your financial success.”

These strategies include getting to know your tax bracket through the Australian Taxation Office website and carefully keeping track of your eligible deductions, maybe through a smart budgeting app. Whether buying a home, refinancing your mortgage, or coping as a renter, foresight and preparation are key to navigating the path of rate hikes. 

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