March home loans snapshot: Economists expect the cash rate will peak in May

The Reserve Bank of Australia has made it clear that interest rates will continue to rise this year, much to the dismay of Aussie borrowers.

Since the release of the December quarter inflation report, which showed inflation at 6.9% instead of the 6.5% the RBA was expecting, the central bank has been much more aggressive in its messaging around future rate hikes. 

References to the RBA not being on “a pre-set path” in its February statement were replaced with confirmations that more rate hikes were on the horizon, prompting many analysts to revise their cash rate forecasts.

Westpac economists now expect the cash rate will peak in May at 4.1%. They had previously pencilled in a 3.85% peak for May, meaning that borrowers might be subjected to another 50 basis point jump in a single month. 

There’s also the matter of all the fixed rate loans that are set to expire this year, which would plunge thousands of borrowers into a much higher interest rate environment than they’re accustomed to. 

As CommBank senior economist Belinda Allen recently put it, “there is more tightening to come for the Australian household sector irrespective of how much higher the RBA takes the cash rate.”

So what do both fixed rates and variable rates look like at the moment? Find out below.

Recent home loan rate movements

Variable rate home loans

• ING’s Mortgage Simplifier rates are up 25bp but its Orange Advantage rates were increased by 20bp. 
  
• Gateway Bank increased most variable rates by 25bp, however its Green Home Loan and Green Home Loan Plus under its Premium Package are both only up 15bp, now starting from 4.64% (4.93% comp rate*). 
  
• Great Southern Bank added 25bp to most variable rates, but rates for owner occupiers with LVR’s less than 80% increased more. The Basic Variable is up 30bp to 5.04% (5.10% comp rate*) and the Offset Variable is up 35bp to 5.09% (5.19% comp rate*) for LVR’s up to 70% and 5.14% (5.20% comp rate*) for LVR’s up to 80%.

Fixed rate home loans

• Bendigo Bank lifted its 1 year rates by 90bp, now from 5.84% (4.98% comp rate*) and its 2 year rates by 50bp, now from 5.74% (5.06% comp rate*). 
  
• Macquarie’s 1 year rates are up 86-100bp, 2 year rates are up 44-64bp, 3 years are up 14-34bp, 4 years are up 24-36bp and 5 year rates are up 16-30bp. 
  
• Yard lifted its 1 year rates by 10bp, but cut its 2 year options by 15bp, its 3 year rates by 25bp, and 5 year rates by 35bp.

Current lowest home loan rates

Interest rates have been trending upwards for some time now, but that doesn’t mean that there aren’t any worthwhile deals still on the market. Below are the lowest variable and fixed mortgage rates (P&I, LVR <80%) among lenders we track.

Lowest variable rates — Mozo database (March 1, 2023)^^

Lowest fixed rates — Mozo database (March 1, 2023)^^

The above are the lowest rates available in our database for borrowers with an <80% LVR. More competitive rates are available for borrowers with lower loan-to-value ratios.

Thinking about buying a property or refinancing your existing mortgage? Use Mozo’s home loan comparison table to examine lenders side-by-side, or use our refinance calculator to see how much you could save.

^^Interest rates are based on an owner occupier making principal and interest repayments on a $400,000 loan with an 80% LVR. Check out our dedicated Australian home loan statistics page for more information on average mortgage rates.