Home loan interest rate forecast: When will rates drop?
What your home loan rate might look like if predictions from the big 4 banks and our economist panel are accurate.
What different scores mean
9+
Excellent
These home loans offer low costs, coupled with a host of features, giving the best overall value.
7+
Great
These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.
5+
Standard
Usually the home loans would offer above average rates. They may still include some competitive features.
0+
Basic
Higher costs and/or fewer features.
When will interest rates go down?
The cash rate, set by the Reserve Bank of Australia (RBA), has already risen 13 times since May 2022. These rises have taken the average variable owner-occupier interest rate on existing home loans from 2.86% in April 2022 to 6.32% in December 2024 according to RBA data.
Rate relief for consumers in 2025 is looking very likely. The majority of economists (73%) are predicting a rate cut in February according to Finder's RBA Cash Rate survey.
Forecasts from the big 4 banks and economists
The average owner-occupier currently has a variable home loan rate of 6.32%.
This is what typical home loan interest rates might look like if the big four bank and economist forecasts are correct and they pass on the rate decreases in full.
Average variable home loan rate based on bank and economist forecasts
| Month | 40+ economist cash rate forecast average* | Westpac forecast | CBA forecast | NAB forecast | ANZ forecast |
|---|---|---|---|---|---|
| January 2025 | 6.32% | 6.32% | 6.32% | 6.32% | 6.32% |
| February 2025 | 6.14% | 6.07% | 6.07% | 6.07% | 6.07% |
| March 2025 | 6.14% | 6.07% | 6.07% | 6.07% | 6.07% |
| April 2025 | 6.05% | 6.07% | 6.07% | 6.07% | 6.07% |
| May 2025 | 5.94% | 5.82% | 5.82% | 5.82% | 6.07% |
| June 2025 | 5.94% | 5.82% | 5.82% | 5.82% | 6.07% |
| July 2025 | 5.91% | 5.82% | 5.82% | 5.82% | 6.07% |
| August 2025 | 5.85% | 5.58% | 5.58% | 5.58% | 5.82% |
| September 2025 | 5.81% | 5.58% | 5.58% | 5.58% | 5.82% |
| October 2025 | 5.81% | 5.58% | 5.58% | 5.58% | 5.82% |
| November 2025 | 5.78% | 5.33% | 5.33% | 5.33% | 5.82% |
| December 2025 | 5.76% | 5.33% | 5.33% | 5.33% | 5.82% |
*The monthly predictions are averaged. Therefore some month to month movements will be less than 25 basis points. Economist forecasts as at 13/02/25, bank forecasts as at 03/02/2025.
How much have mortgage interest rates risen?
For a home owner who hasn't refinanced or negotiated their home loan, variable rates have risen by almost 150% from April 2022 to May 2024, this has added $1,273 to monthly repayments on a $500,000 loan which adds up to an extra $21,474 a year.
Finder's Consumer Sentiment Tracker (CST) reveals 35% of Australians with a mortgage are struggling to make their repayments. This is up from only 24% in January 2022.
When asked which bills or expenses cause the most stress, 64% of mortgage holders rate their mortgage repayments among their top 3 most stressful expenses.
Compare refinancing options
An existing mortgagee with a variable rate home loan is paying 6.32% on average. This is 0.33% higher than the lowest rate of 5.99% on the Finder site. Switching to the lowest rate would save $2,119 of interest in their first year, on the average loan size of $641,416.
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How we picked theseWhat is Finder Score?
The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
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