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

Collage of friends adding another rate hike block to a sequence.

The era of rate hikes is far from over. Unusually for the Reserve Bank of Australia, last month’s cash rate announcement and meeting minutes flagged the board’s intentions to announce more rises in the coming months, all to curb runaway inflation that has yet to slow down. 

As a result of the current tightening cycle, interest rates now sit firmly within contractionary territory, meaning the board considers them high enough to start squeezing inflation out of the economy. Despite this, the Big Four banks reckon we haven’t reached the cash rate peak yet, so there’s still more mountain to climb. 

But with property prices tanking and more borrowing standing at the gates of mortgage prison, could the RBA take it too far?

Let’s get into the cash rate predictions for the 7 March RBA decision.

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

People grabbing slices of a pie chart.

Even the current 3.35% cash rate seemed unthinkable to hawkish economists at one point. But RBA governor Philip Lowe defended the board’s determination to raise interest rates in the face of mounting mortgage and rental stress, citing inflation as far more ‘corrosive’ to the economy and the welfare of Australians.

“People are really hurting, I understand that. But I also understand that if we don’t get on top of inflation it means even higher interest rates and more unemployment,” Lowe explained.

“If inflation stays high, it’s very damaging to the economy. It worsens income inequality, it makes it harder for businesses to plan, and it erodes the value of people’s savings.”

RELATED: Why do rate hikes fight inflation?

As a result of this mindset, another rate hike in March seems inevitable. Commonwealth Bank, Westpac, ANZ, and NAB agree the RBA will move by another 25 basis points, lifting the cash rate to 3.60% p.a. 

This decision will cascade into more lifts to variable rate mortgages in March. Savings rates will likely see a boost, too, but these rises have been more modest and few between than the changes made to home loans.

For context, last year's average interest rate for owner-occupied variable home loans clocked at around 3.14% p.a. in the Mozo database (1 March 2022). Now, it’s 5.88% p.a.

Loan details

Rate change

Repayment change if rates go up

How high will rate hikes go in 2023?

Collage of a woman looking at ascending rate hike bars.

According to the Big Four Banks, March’s RBA decision will be followed by several 25 bp movements into winter, pushing the cash rate to 3.85% as early as April or 4.10% as late as June.

Cash rate peak predictions from the big banks (1 March 2023)

Bank
March 2023
April 2023
May 2023
June 2023
CBA
3.60% p.a.3.85% p.a.--
Westpac3.60% p.a.3.85% p.a.4.10% p.a.-
NAB3.60% p.a.Nil3.85% p.a.4.10% p.a.
ANZ3.60% p.a.Nil3.85% p.a.4.10% p.a.

CBA has the most dovish estimate, with a 3.85% peak in April. Westpac is the most hawkish, with a speedy round of 25 bp hikes shoving rates as high as 4.10% in May.

NAB and ANZ have built in a pause in April, as the Australia Bureau of Statistics (ABS) will release new wage growth data around then for the RBA to consider. If wage growth proves too slow, the RBA may hold off for another month to allow borrowers time to recuperate. 

Before the February RBA meeting, 3.85% served as the most extreme rate peak prediction.

Mortgages now at risk due to rate hikes

Chaotic collage of calculators, homes, and people panicking over their mortgage.

According to the ABS, borrowers scrambled to refinance $19.1 billion worth of mortgages in December 2022, fleeing rising costs brought on by RBA rate hikes. But rate hikes can also hurt borrowers’ chances at successfully refinancing, trapping them with mortgages they can no longer afford.

Rising interest rates cause falls in property prices, which can eat into the equity of some homeowners – even drawing them into negative equity if they bought recently with a smaller deposit. A high LVR makes a borrower seem riskier to a lender because they may owe more money than their home is actually worth.

Interest rates also affect upper serviceability test limits. When applying, lenders will assess your ability to pay off your mortgage at interest rates above and below their current variable offer. This means you not only have to qualify for the current interest rate, but one that’s theoretically 3% higher – and how many people can afford a home loan in the 7% - 9% range?

Luckily, savvy borrowers can negotiate a way out of this through careful financial planning and research. However, it can also escalate into full-blown mortgage prison if the risks aren’t managed, which is the worst-case scenario. 

Mortgage prison can lead to homeowners defaulting on their loans, and if too many do this at once, it can be a hair-trigger for an economic recession. The RBA has been carefully trying to avoid this, as pushing rates too high can spiral out of control and ruin the ‘soft landing’ it wants. 

However, RBA governor Philip Lowe admits this is a ‘narrow path’ to tread. Rates need to be high enough to stop inflation, but not high enough to completely reverse it and crash the economy.

Refinancing your home loan? Here’s how to improve your chances

Two people carrying blocks (either three or one) while balancing on a seesaw.

New buyers have a great window to buy into a falling housing market, though they’ll need to research and compare carefully to maximise their chances of nabbing a home loan that works for them. Refinancers, on the other hand, face a steeper hill to climb. 

Lenders look for red flags in your application, which all fall into two basic categories: high debt or uncertain income. Shopping on your credit card, taking out a car loan, switching jobs, having children, or even spending too much of your savings tell a lender you could be a risky investment.

Instead, give your home loan application a fighting chance with these strategies:

  • Consolidate and pay off debt – of any kind. Lenders look at every type of debt you could incur, including HECS-HELP student loans and Buy Now Pay Later debt. Clear as much from your ledger as possible. 
  • Pay attention to your credit card limits. Lenders consider your upper limits, not just how much you’ve charged on your card. If your card limit is $10,000, it could lower your borrowing power by the same amount. 
  • What’s your credit score? Request a free credit report to make sure you’re in the green. If you’re not, take steps to improve your credit score.
  • Cut back on extraneous spending. While most Australians have already tightened the proverbial belt to deal with inflation, watching your spending is still essential. If you can, try and put consistent amounts into a savings account, too, as this shows you’ve got room in your budget to handle rate changes. 
  • Plan ahead, plan ahead, plan ahead. If you want to refinance this year, start cleaning up your finances now. Doing this lets you demonstrate consistent income, spending, and borrowing habits to a future lender. It also gives you time to compare home loans, such as those with low rates and offset accounts

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

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 472 home loans.
Last updated 14 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
    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.

  • 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.

  • 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.

  • 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.

  • 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.

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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.

^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.