When are interest rates expected to drop?

From May 2022, the Reserve Bank of Australia (RBA) began one of the most aggressive monetary tightening periods in Australian history as it tried to curb soaring inflation.

But with several months of cash rate pauses by the RBA, many believe the tide may have turned.

So, now the question on everyone’s lips is: when will interest rates come down in Australia?

While there’s no crystal ball to predict exactly what the RBA will do next year, there is growing speculation that interest rates will come down in 2024. Let’s see what the experts are predicting.

What the Big Four banks are saying

• Commonwealth Bank expects there to be four cash rate reductions, kicking of from March 2024 and finishing with a cash rate of 3.10% by the end of next year.
• Westpac is banking on a more gradual decline, starting with a cash rate drop in September 2024 and another one in December to 3.60%.
• NAB is anticipating a cash rate cut in August 2024. It anticipates the cash rate will return to around 3% by early 2025.
• ANZ foresees the RBA pausing the cash rate for an extended period, before easing it towards the end of 2024.

It’s important to remember that the predictions above are not a guarantee. Unforeseen events like changes in global economic conditions or domestic policies can impact cash rate decisions.

What about inflation?

The RBA has been trying to get inflation back within the target range of 2-3%. In recent months, we’ve seen inflation coming down, so it appears things are on track.

According to the RBA, headline inflation is expected to decline to 4.5% by the end of 2023 and to reach 3% by mid2025.

What you can do as a borrower

Stay informed

Make sure you keep across the news so that you are up to date with the RBA’s cash rate decisions.

Next year the RBA is changing things up, following recommendations from the review of the central bank. There will be eight cash rate decisions instead of 11. Four of the meetings will be on the first Tuesday of February, May, August and November. The other four meetings will be held midway between these meetings (dates to be confirmed).

Regularly review your home loan

With interest rates potentially on the move, it’s important to review your home loan. It’s especially true if you haven’t had it checked in the last two years.

Please contact us for a home loan health check and we’ll explain how your current loan measures up in today’s mortgage environment, along with if refinancing could be right for you.

Like to talk through your options?

Maybe you’re thinking about buying a property once interest rates come down. Contact us about how a drop in interest rates could affect your borrowing capacity and what you can do now to prepare for a property purchase in the near future.