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

Collage of a woman looking back upon rate hikes of yesteryear.

After ten consecutive rate rises, the Reserve Bank of Australia astonished home loan borrowers with a dovish pivot in April, voting to leave the cash rate on hold at 3.60%.

Despite the pause, RBA board meeting minutes indicate the decision could’ve gone either way, and while inflation remains high, it has lost steam. 

So let’s break down predictions for the RBA’s 2 May meeting. Will there be another rate hike? Or have we finally reached the cash rate peak?

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

Collage of people lifting a final block onto a series of block towers, like a final rate hike for 2023.

Forecasts remain highly contested for the May RBA decision between the big banks. Last month, only Westpac and Commonwealth Bank (CBA) correctly predicted the pause, while NAB and ANZ leaned hawkish in favour of another 0.25% increase to the cash rate

The arguments for a rate hold remain largely the same headed into May: inflation has begun to cool and consumer sentiment has plummeted, but not enough to completely rule out a future move. During the March quarter, headline inflation clocked in at 7.0%, which is still way too high for the RBA's comfort. 

As it stands, the case for changing the cash rate has lost steam. CBA alone forecasts a final 0.25% boost in May before the RBA leaves it steady until 2024. NAB and Westpac claim the RBA is done for this tightening cycle, posting a 3.60% cash rate until rates drop in 2024, while ANZ maintains the May meeting is “live”, meaning it could go either way (hike or no hike). 

Either way, the Big Four banks agree we can look forward to unwinding rates next year.

Big Four Bank cash rate predictions - 24 April 2023

May 2023June 2023
CBA3.85%-
WestpacNil-
ANZ3.85% or Nil-
NABNil-

Indeed, Westpac and CBA announced mild increases to some of their lowest variable home loan rates in April, while according to Mozo’s database fixed rate home loans saw six times more cuts than rises. Since fixed rates are predictive, the peak seems near at hand.

So while banks expect costs to remain high in the short-term, their behaviour suggests mortgage rates may come down sooner rather than later.

How will changes to the RBA affect mortgage rates?

Collage of a man treading a path that diverges between smooth and squiggly.

Last week, Australian treasurer Jim Chalmers unveiled a thirty-year review of the Reserve Bank and its monetary policy. Chiefly, the review probed into whether the RBA has been effective in following the mandates of its charter: smoothing the highs and lows of the business cycle and ensuring the welfare of Australians. 

Among the 51 recommendations are changes to how the RBA makes cash rate decisions. This includes creating a separate board to set rates that only meet eight times a year (rather than eleven). This could slow down and spread the pace of future rate changes and give households a chance to absorb them. 

Monetary policy also operates with a lag, which could also give the RBA a chance to gather more evidence and study the effects of rate changes before making decisions.

While these recommendations have yet to be set in stone, they will ultimately change little for borrowers. Fighting inflation will continue to be the RBA’s priority, and that means upping interest rates until consumer demand slows.

Loan details

Rate change

Repayment change if rates go up

What will happen to the property market if interest rates hold?

Collage of a woman standing at the end of a line with a final red block.

Eyes have returned to the property market, which has seen enthusiastic price boosts and sales volumes over the last few weeks. While consumer sentiment has risen in the wake of April’s rate hold, Westpac reports that the market is a slingshot primed to fire. Once consumers become convinced that rates have peaked, buyers itching to snap up homes will go, go, go. 

This could likely lead to an explosion of competition and home values across the country reminiscent of the 2020 - 2021 property boom, despite the higher cost of housing finance. 

“There are people desperate to buy houses,” explains Mozo banking expert Peter Marshall. “It’s the same for a place to rent, even if you can afford it. There are a limited number of vacancies. So how much money can you throw at a problem?

“I’ve seen plenty of evidence that people are willing to pay silly money just to get the deal done and have a house. So I think as soon as people get the confidence that the RBA is done or pretty much done with increasing rates, it will all take off again and go like a rocket. It depends on how quickly the economy recovers and how bad it gets – but it’s not looking pretty.”

First home buyers hoping to get a foot in the door, take note. You may have a limited window before prices balloon again to silly heights.

Is now the best time to refinance?

Collage of a woman teetering on an unstable block.

For those already repaying a mortgage, whether to refinance or stick with your lender continues to haunt 2023. Australians refinanced $19.9 billion worth of home loans in February 2023 alone.

While now may be a great time to refinance for some, other borrowers may find themselves inadvertently trapped with their lender due to changes in their lifestyle and financial circumstances. 

For example, if you’ve had a kid, taken out a new credit card, or lost equity in your property since you bought it, you now look like a risky bet to lenders. Those having trouble refinancing for these exact reasons become home loan hostages

The good news? A home loan hostage situation can be temporary. So if you’re thinking about refinancing, here are some steps you can take to improve your chances of success. 

  • Make sure you’re earning and saving consistently. Lenders love safe bets. If you’ve recently switched careers or found it harder to save due to the cost of living, you might unintentionally come across as a home loan red flag. Instead, accumulate at least three months of consistent paychecks and top-ups to your savings account before refinancing. This way, you show future lenders you can absorb any rate changes. 
  • Cut back sooner rather than later. Refinancing is not a snap decision: it requires a similar level of preparation and forethought as applying for your original loan. If you think you’ll refinance later this year, clean up your spending habits now. Lenders want to see a frugal history, not just a frugal moment. You can download a budgeting app to monitor your expenses to get started. 
  • Compare, compare, compare. Making more than one refinancing application registers as a “hard enquiry” on your credit report. If you don’t go with your new lender, this can lower your credit score and hurt your chances of refinancing. Compare lenders thoroughly beforehand so you can limit your refinance application to one. 

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 473 home loans.
Last updated 22 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.

  • 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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