Will interest rates go down in 2023?

WITH THE UFINANCIAL TEAM

The official cash rate is now 2.85 per cent – 2.75 per cent higher since the Reserve Bank of Australia (RBA) lifted the cash rate in May this year for the first time in nearly 12 years.

“The increase in interest rates over recent months has been required to bring inflation back to target and to create a more sustainable balance of demand and supply in the Australian economy,” Reserve Bank of Australia (RBA) governor Philip Lowe said in a statement .

The RBA Board lifted the official cash rate by 0.25 per cent on Tuesday (November 1), and the burning question, or should I say questions, are: will rates continue to rise, and when will they come down?

Will rates continue to rise?

All signs point to yes. Many economists believe rates will increase to around the mid-3 per cent mark by early 2023.

Experts from the big four banks have also released their predictions.

CBA expected rates would reach 2.85 per cent by this month, Westpac 3.60 per cent by March 2023, NAB 3.10 per cent by this December, and ANZ 3.35 per cent by this November.

 

Will interest rates drop in 2023?

It’s nearly impossible to predict exactly what will happen – after all, we don’t have a crystal ball.

However, some economists speculate the RBA could consider a rate reduction in 2023 if national wages do not increase significantly and no new economic shocks occur.

Two of the four big banks expect rates to begin dropping only by the end of 2024.

Unfortunately, we know that some households are more vulnerable to the increases than others and are more likely to face financial stress.

If that’s you, there are ways you can make your payments more manageable.

A financial advisor or a mortgage broker can help outline your options.

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