Refer to: www.canstar.com.au
Interest rates have been increasing steadily since May but when can we expect them to begin falling? We take a look at what various experts, including the big four banks, have to say.
The official cash rate has hit 3.35% after the Reserve Bank of Australia (RBA) increased it by 25 basis points in its February meeting. This is the ninth rate hike in a row and many homeowners are feeling the pain.
According to Canstar, the latest increase means borrowers with a $500,000 mortgage over 30 years will be paying about $969 more per month to cover their repayments than they were in April, assuming lenders pass on the rate rise in full. That’s a lot of extra money to have to come up with!
Many homeowners are probably wondering when things will start turning around – how long will they have to wait for rates to start falling again? To get an idea of when the RBA may start reducing the cash rate we turned to the experts, starting with the big four banks.
When do the big four banks think rates will go down?
ANZ: Late 2024
ANZ expects rate hikes of 25 basis points in each of the next three RBA meetings that will see the cash rate peak at 4.1% in May. ANZ forecasts that the first rate cut will be in November 2024.
Commonwealth Bank: Late 2023
Commonwealth Bank expects a few more rate hikes with the cash rate peaking at 3.85% by the middle of the year. CBA expects the cash rate to drop by 50 basis points in the last quarter of 2023 followed by more rate cuts in the first half of 2024 that will see the cash rate sitting at 2.85% by June 2024.
NAB: Early 2024
NAB is forecasting that the RBA will lift rates by 25 basis points at each of the next three meetings to a peak of 4.1% in May. NAB expects the cash rate to stay at that level for the remainder of the year, before dropping by 50 basis points in total in the three months to March 2024 to 3.60% and a further 50 basis points in the three months to June 2024 to 3.10%.
Westpac: Early 2024
Westpac predicts that the cash rate will hit 3.60% in March and climb a further 25 basis points to reach 3.85% at the May Board meeting. Westpac expects it will then remain at 3.85% for the remainder of 2023, before falling by 25 basis points to 3.60% by March 2024. Westpac thinks this will be followed by 25 basis points worth of rate cuts each quarter that will bring the cash rate to 2.85% by the end of 2024.
