How high will interest rates rise in 2023?
After the Reserve Bank of Australia (RBA) increased the cash rate to 2.85 per cent in its Melbourne Cup Day meeting, the major banks have adjusted their forecasts for when interest rates will peak.
Here’s what they are saying:
Westpac predicts rates could go as high as 3.85 per cent by March 2023, while ANZ forecasts the cash rate will take a little longer to peak at that level in May.
NAB’s forecast is a little more conservative. It expects the interest rate to hit 3.6 per cent by March 2023, which would push the average variable rate to 6.48 per cent.
For an average $1 million home loan, that equates to an extra $2,100 a month compared to earlier this year when the official cash rate was at a historic low of 0.1 per cent.
CBA expects interest rates to hit 3.10 per cent by the end of the year and remain steady for the first half of 2023.
This follows seven consecutive months of interest rate rises aimed at curbing soaring inflation, which currently sits at 7.3 per cent – Australia’s highest inflation rate since 1990.
Larger home repayments coupled with higher living costs means many borrowers will be looking for ways to save money.
While refinancing to secure a more competitive rate might seem like an obvious step to take, borrowers shouldn’t rush into making this decision.
That’s because there’s a lot to consider. Does a loan with a lower rate provide the same features? Will the new loan suit the borrower’s needs over the long term? For example, can the borrower access equity from their property if they wish to renovate down the track?
With so much at stake, leaning on a professional to help guide you through the process can really pay off. Speaking with a broker about which loans will suit your needs could not only lead to a good financial outcome but can also provide valuable peace of mind.
In the same way, brokers can help new home buyers—to understand loan features, lending terms and navigate the special loan rates flooding the market—helping to make their home lending journey smoother.
Contact us today to discuss refinancing or lending options for a new home.
