Mortgage holders will likely be spared another interest rate hike in February, with all major banks now forecasting the Reserve Bank (RBA) will hold the cash rate when it meets next month.
NAB, Australia’s third largest bank, has today updated its cash rate forecast, changing from a 0.25 per cent hike to a hold for February.
Interest rates have soared from a record low of 0.10 per cent to 4.35 per cent since May 2022, adding an extra $1,349 per month to a $600,000 mortgage.
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Today’s update means all of the big bank’s economic teams think interest rates have peaked for this rate-hiking cycle. But RateCity research director Sally Tindall said borrowers “shouldn’t get too excited just yet”.
“The RBA hasn’t yet ruled out the possibility of another hike so Australians shouldn’t either,” Tindall said.
“At this stage, another hike is looking increasingly unlikely, on the back of better than expected inflation figures, however, borrowers should make sure there’s room in the tank for one more, just to be on the safe side.”
When will interest rates come down?
CBA, Westpac, NAB and ANZ are all predicting there will be at least one cash rate cut in the second half of 2024, but the size and timing varies.
CBA expects the RBA will start cutting interest rates in September 2024, with three interest rate cuts totalling 0.75 per cent expected by the end of the year.
Westpac forecasts the first cut will come in August and is expecting two cuts in 2024.
NAB thinks there will be just one cut in November, and ANZ thinks there will be one cut in the fourth quarter of the year.
‘Don’t bank’ on rate cuts
Tindall urged mortgage holders to see if they can get financial relief now, rather than waiting for rate cuts down the line.
“While the cash rate is likely to go down at some point, if you’ve got a mortgage, don’t bank on this happening in 2024,” Tindall said.
“No one knows what’s around the corner with 100 per cent certainty - not even the RBA.
“If you need financial relief, don’t wait around for the RBA or the government to serve it up on a platter. Take the bull by the horns and seek it out for yourself,”
Tindall recommended borrowers try to refinance to a lower interest rate, or haggle with their lender for a rate cut to inject real, ongoing relief into their budget.