Why Are Fixed Rates Rising If Interest Rates Are Expected to Fall?
Understanding the Shift in Fixed-Rate Loans
Fixed home loan rates have taken borrowers on a rollercoaster ride in recent months.
- In April 2023, some lenders reduced their fixed rates.
- By July 2023, major banks—including NAB, Westpac, ANZ, and Commonwealth Bank—raised fixed rates, with no fixed-rate loan below 6%.
So, what’s driving this trend? More importantly, how does it impact your mortgage strategy?
Are Interest Rates Supposed to Drop?
Many experts predict interest rates will decline in the next 12–18 months:
- Westpac forecasts the RBA cash rate will dip to 3.85% by the end of 2024.
- NAB expects an even sharper drop, projecting a 3.10% cash rate by late 2024.
Yet, despite this outlook, fixed rates are rising—why?
🔎 Read more about refinancing on our dedicated refinancing page
Why Are Banks Increasing Fixed Rates?
Banks set fixed rates based on future interest rate expectations, not just current trends.
- NAB and Westpac predict the RBA cash rate may spike to 4.60% before eventually falling.
- Commonwealth Bank expects at least one more rate hike, potentially reaching 4.35%–4.60%.
This uncertainty around short-term increases leads lenders to push fixed rates higher in the meantime.
What Should You Do?
1. Remember That Forecasts Aren’t Guaranteed
Even major banks’ predictions aren’t foolproof.
- The June 2023 inflation slowdown may prompt the RBA to cut rates sooner, potentially bringing fixed rates down again.
📌 Stay updated on market trends
2. Look Beyond Major Banks
Not all lenders are increasing fixed rates—some smaller lenders still offer fixed loans below 6%.
Considering alternatives could save you thousands in interest payments over time.
Fixed vs. Variable Loans: What’s Right for You?
Locking in a fixed-rate loan brings certainty to your budget, removing the stress of fluctuating rates.
If you’re unsure whether to go fixed, variable, or split, a mortgage broker can help analyse your options.
📌 Read our detailed guide on fixed vs. variable loans
🔎 Need expert advice? Contact CBM Mortgages today to discuss your loan strategy!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Written by Craig McDonald 13/06/2025
