When in 2024 will interest rates start falling again?
Waiting for interest rates to fall? Economists are predicting a rate cut for 2024 but they're divided on when.
Before I dive into the predictions and the whys of when interest rates are going to fall, I'm going to start by telling you I'm not really going to answer the question.
The truth is that global and domestic pressures can impact the economy in unexpected ways at any time.
So although I can tell you what is expected to happen, why it's expected and when it's expected, it's all assuming every other cog in the wider system plays ball.
With how those cogs are turning currently 2024 looks promising, but there are still economists who think we won't see a cut until next year.
What are the current expectations?
Each month Finder surveys a panel of economists around RBA movements and other economic trends.
The good news is that 93% believe the cash rate has peaked: that means no more rate increases.
63% of our economists are saying there will be a rate cut in 2024 and most of those (85%) think it will be from August onwards.
37% of our economists are predicting the first rate cut won't be until 2025.
This is mostly in line with the predictions of the big four banks, which are forecasting a rate cut from September.
It's worth remembering though that RBA governor Michele Bullock has said she will not hesitate to increase rates again if necessary.
So, interest rates are predicted to fall between August and December 2024… maybe.
I told you I wouldn't really be answering the question.
Keep up with when interest rates are going to fall with our comprehensive guide
What does this mean for homeowners?
Well, the good news is that assuming all the cogs continue to turn the way we want them, homeowners should see lower interest rates this year.
This means lower repayments for you variable rate borrowers. But, if you can manage to continue paying your higher repayments, you could save thousands. Anything extra you pay into the loan will go straight towards your loan value, bringing down your balance and paying off the loan faster. If you ever need access to the money, most variable loans (and some fixed too) will allow you to draw down funds from any extra payments you've made.
Instead of simply waiting for the rate cuts, it's a good idea to start looking at rates now. If you can refinance onto a lower rate ahead of the rate cuts, you're in a good position to get a better deal down the track. A 25 basis point cut from a 6% loan is better than one from a 6.50% loan.
Then in a year's time, you can look again to see what offers banks have on the market to entice new borrowers with their lower rates.
Prepare for falling interest rates by comparing other rates on the market.