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What’s the Forecast for Home Loan Interest Rates in 2024?

After two years of relentless rate rises, the question that every mortgage holder has is... When are interest rates finally going to start falling?

If we were answering this question even just one month ago, the outlook was a little different. That is the thing about the mortgage market: it is evolving every single day, responding to the economy and evolving as new trends and data points become available.

As of May 2024, this is what is expected of the mortgage market for the rest of 2024.

People are going to fall further behind on their home loans

    As expected, when interest rates increased by over 4% in less than two years, the number of households struggling to make their repayments increased. 

    At Suncorp, home loans in arrears of 90 days or more have climbed $85 million in the first quarter of 2024 to $510 million. It now accounts for 0.73% of the bank’s gross loan assets. At CBA, home loans of 90 days or more were 0.61% in March, up from 0.52% in December 2023 and 0.43% at the end of 2022.

    It is expected that loan arrears will continue getting worse, which could lead to more bankruptcies and repossessions. Traditionally, this has prompted more housing stock on the market and a correlating slowdown in property price growth. 

    Interest rates won’t rise

    For those of us who currently have a home loan or who are looking to buy a property and take out a loan shortly, what we want to know is: can interest rates possibly get any higher?

    In early May, Judo Bank economic head Warren Hogan suggested they could! He predicted that there could be as many as three cash rate hikes over the remainder of this year, potentially seeing the cash rate soar above 5% and home loan rates hitting 7%-8%. He pointed to stubbornly high inflation as the cause. Fortunately, he is in the minority with his forecast, and he did say he would closely monitor data and trends over the coming weekend and months, adding: “Hopefully, I'm wrong.”

    Interest rates might fall 

    Experts and economists are expecting that's we will see interest rates start to fall in 2024. The Big 4 bank’s current predictions are:

    • ANZ  – November rate cut 
    • CommBank – September rate cut
    • NAB – November rate cut  
    • Westpac – November rate cut

    This is very welcome news for any and all Australians who have a mortgage or plan to have one. A rate cut of 0.25% is equivalent to a saving of around $100 a month on an average $600,000 home loan.

    Activity levels are falling

    According to Pexa, In the first quarter of 2024, the number of new loans issued fell 17% on the previous quarter. Refinancing levels in the same quarter are down 16.4%. 

    There’s no denying that higher interest rates have boxed plenty of Australians into their current loans, as they cannot afford to refinance or to move house.

    However, many don’t realise there are options to restructure debt and rearrange their financial situation to be more streamlined. We work with hundreds of Australians every year to negotiate lower rates on their home loans, optimise their financial situation and help them pay off bad debts and increase their asset base along the way. If you would like an obligation-free chat, contact us today!

    Phone: 1300 855 022

    Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.

    About the Author:   

    Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.   

    Connect with Louisa on Linkedin.   

    Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

    Disclaimer: This information is provided without considering your specific objectives, financial situation, or needs. Therefore, it’s essential to evaluate its suitability in light of your individual circumstances before taking action.

    Comparison Rate calculated on a secured loan amount of $150,000 for a term of 25 years. WARNING: This Comparison Rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different Comparison Rate. Fees and Charges Apply. Terms and Conditions are available on request.