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

Collage of a man walking beside an arrow toward the next RBA cash rate decision.

The Reserve Bank of Australia (RBA) has hit a lull in the rate hiking cycle. Between May 2022 and June 2023, the central bank raised official interest rates by 4.00% – a Herculean leap to combat Herculean inflation. Each hit to the cash rate brought more home loan pain to variable-rate borrowers and tightened the expanding economy with a vice.

But despite inflation sticking higher than the target band, the RBA has held off on making any more changes for the last two months, leaving the official cash rate at 4.10%. Though the bank retains a tightening bias – ‘we will hike if we have to’ – the appetite for more seems sated. Experts at Australia’s Big Four Banks now speculate that rate hikes are over. 

However, household spending has risen, and the monthly Consumer Price Index (CPI) shows stubbornly high housing, food, and services inflation, which may create trouble for the RBA. 

Indeed, even though inflation has mostly been driven by supply chain issues and corporate profiteering, the RBA may see consumers spending more of their household wages as getting ‘complacent’. A rate hike in September would be a resounding reminder that money these days should be saved, not spent.

So with another RBA meeting coming up, do borrowers have to brace themselves? Or is the era rate hikes truly done? Let’s break down the forecasts for the RBA’s 5 September meeting.

Will the RBA hike interest rates in September?

Collage of a person standing on top of an interest rate mountain.

Both the July and August RBA rate holds were preceded by heavy debate. Most odds were split fairly evenly on whether the central bank would hike or hold. However, the predictions are more uniform this time: the RBA will not hike the cash rate in September. 

“It seems more likely that they’ll hold,” says Mozo banking expert Peter Marshall.

“There’s definitely a risk that they’ll hike, but there’s been no data out in the last month that would suggest a change of direction from their last meeting, so I think they’ll hold for a bit longer.”

Marshall points to Mozo’s latest banking data as further proof lenders believe the rate hiking cycle is finished. CommBank, Macquarie, and ING have all cut their fixed home loans recently, suggesting they see monetary policy holding steady. 

“Whether that counts for much in the end, I don’t know, but that does seem to be where their thoughts are at the moment,” he says. 

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

Collage of four hands pointing to an RBA interest rate decision question mark.

At the moment, the Big Four Banks are in universal agreement there will be no rate rise in September, but that doesn’t mean there is consensus on how high interest rates will go

While Westpac, Commonwealth Bank, and ANZ all argue that interest rates have gone far enough, NAB believes there will be one more rate hike left in this cycle – most likely by December 2023. 

Big Four Bank cash rate predictions – September 2023

Cash rate peak
ANZ
4.10%
CBA
4.10%
Westpac
4.10%
NAB
4.35%

Marshall agrees there is a near-term risk that inflation data could convince the RBA to hike the cash rate one more time – most likely in October or November when the quarterly CPI comes out. 

However, the buzz surrounding a potential rate pause means there’s a lot to celebrate. Whether we’re one or done, borrowers can soon relax about their mortgage repayments

“It’s probably not going to be until the first quarter of next year that we can actually feel comfortable that the rate cycle is over. It will take a bit longer to ensure that the key economic indicators are going in the right direction,” explains Marshall.

“But once that happens, people can stop worrying about increasing prices on their mortgages.”

When will interest rates come down?

Collage of two people hiking down an interest rate cut graph.

Of course, the next phase to look forward to if the RBA is done raising rates is the prospect of a cash rate cut. The central bank will lower interest rates once inflation hits the top of its target band of 2% - 3%. The Big Four Banks estimate this won’t happen until late 2024 at the earliest, so the cash rate will likely stay above 4% until then.

The good news is that when rates start falling, it’ll likely happen in 0.25% intervals – starting with a first cut between July and September in 2024, according to NAB and Westpac.

NAB expects the cash rate to peak at 4.35% by December 2023 before eventually lowering between June 2024 and March 2025. Westpac follows a similar timeline, except it has the cash rate falling from a peak of 4.10%. 

The models use 0.25% intervals for each rate cut – the standard size of RBA rate changes. 

Cash rate cut predictions from Big Four Banks* – September 2023

June 2024
Sept 2024
December 2024
March 2025
NAB
4.35%
3.85%
3.60%
3.10%
Westpac
4.10%
3.85%
3.60%
(No prediction given)

*Note: CBA and ANZ have not yet laid out concrete timelines at the time of writing, though they also expect rate cuts for late 2024. 

This is, of course, highly dependent on inflation coming down within the time frame and doesn’t take into account unexpected headwinds like an economic recession. 

Cuts to the cash rate also don’t automatically mean cuts to home loans. Lenders aren’t obligated to pass cuts along to customers partially or in full, even though the central bank may expect them to.

“My view is that the home loan rate war won’t start again when the RBA cuts the cash rate,” warns Marshall. “The banks won’t need to offer sweeteners – plenty of people will knock at their doors.”

As a result, we probably shouldn’t look forward to home loan interest rates lower than 3% - 4%. It’s highly unlikely we’ll ever see ones as low as the offers in 2020 - 2022. Back then, the cash rate was at a historic nadir of 0.10%.

What does an interest rate pause mean for home loans?

Collage of a woman thinking about her home loan interest rates as an arrow.

If official interest rates stay the same, it provides some certainty for both lenders and borrowers alike. Borrowers can compare home loan offers that aren’t likely to change under their feet, while lenders can make long-term business decisions without worrying about cash rate hikes adding pressure to their operating costs. 

During the rate pause, variable interest rate home loans will likely stay roughly where they are. We’re unlikely to see offers below 5% until the RBA starts making rate cuts. Fixed rate home loans, on the other hand, may experience changes sooner. 

Since a fixed interest rate doesn’t change for the length of the term, lenders set fixed rates based on what money they think they’ll need to recoup during that period. As a result, fixed mortgages predict the rate environment.

“I think if economic indicators remain reassuring for the RBA over the next couple of months, we’ll see fixed rates starting to drop before the end of the year,” explains Marshall.

“So, another two months or so, and it’ll be a torrent of fixed rate cuts. There are reasons to be optimistic if you’re a home buyer at the moment. Just hold on a little longer, and fixed rates will become more favourable.”

A higher cash rate means higher operating costs for lenders – hence, higher fixed rates. But if lenders expect the cash rate to come down, they’ll lower fixed rates. This means we’ll likely get cuts to long-term fixed rates first, then short terms of 1-3 years. Once this happens, we’ll know that lenders expect RBA rate cuts soon.

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 24 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
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    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

    • 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
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    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
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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.

  • Offset Home Loan

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    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
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  • 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.

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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

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