Rate Cycle Looks Done: What Borrowers Should Do Right Now

With CBA and NAB both forecasting no further RBA hikes, borrowers have a narrow window to review their home loan strategy before cuts arrive.

After three consecutive rate hikes and a cash rate now sitting at 4.35 per cent, Australia's two largest banks by home lending have reached a shared conclusion: the tightening cycle is most likely over.

CBA economists are forecasting the cash rate to hold at 4.35 per cent through the rest of 2026, followed by cuts at the May and August 2027 Monetary Policy meetings. NAB has moved further still, formally abandoning its expectation of a further 25 basis-point hike in August and declaring the next cash rate move will likely be down — with the bank now forecasting the cash rate will end 2027 at 3.6 per cent.

For borrowers who have been watching from the sidelines, the picture is becoming clearer. Not certain — but meaningfully clearer.

What CBA and NAB Are Actually Forecasting

Both major banks share a common thread: the rate cycle has done its job, and the economy is starting to show it.

CBA Head of Australian Economics Belinda Allen noted that post-meeting guidance from the RBA reinforced the view that policy settings are "likely to remain unchanged," while acknowledging that risks remain tilted toward another increase if inflation data warrants it. CBA economists expect economic growth to slow below trend through 2026 as higher interest rates and cost-of-living pressures weigh on household spending — with that cooling in demand expected to gradually ease price pressures.

NAB's economists are more direct. The bank formally dropped its August hike call on 9 June and brought forward its expected easing timetable from the second half of 2027 to Q2 2027. The bank now sees the cash rate ending 2027 at 3.6 per cent.

"We are confident that the RBA is now on hold and that the next move in rates is down, but we are less certain on the timing," NAB stated.

The economic backdrop supports the cautious view. Australia's unemployment rate is rising faster than the RBA had forecast. Per-capita GDP declined 0.1 per cent in the March quarter — a further sign that monetary policy is already biting, possibly more aggressively than intended. These conditions give the RBA less reason to act further and more reason to monitor what's already in train.

Property Update [reports](https://propertyupdate.com.au/has-the-rba-finally-finished-raising-interest-rates/) that both banks acknowledge a degree of uncertainty in the outlook and that risks remain skewed toward rates staying higher for longer if inflation proves stickier than forecast.

This Isn't a Green Light to Stretch Your Borrowing

The CBA and NAB forecasts should not be read as an all-clear to borrow at maximum capacity. Several real risks remain.

First, not all major banks agree. Westpac was still pencilling in 25 basis-point hikes in both August and September — a view shared by no other major bank, but a reminder that the rate outlook is genuinely contested among forecasters.

Second, cuts are not imminent. NAB's earliest forecast is Q2 2027 — nine to twelve months away, at minimum. CBA doesn't see cuts until mid-2027 at the earliest. Borrowers making decisions based on anticipated lower rates could be carrying financial stress for over a year before relief arrives.

Third, the investor credit environment is tightening independently of the RBA. Proposed changes to investment property tax arrangements are being viewed by major bank analysts as an additional tightening of financial conditions. In response, lenders have already reduced maximum loan values for investors by around 20 per cent. Given that approximately 40 cents in every dollar of total mortgage lending flows to investors, this shift will have ripple effects on overall credit availability and property market momentum.

What to Do With Your Mortgage Right Now

**Variable rate borrowers** have likely seen the last of this cycle's rises. But "rates have peaked" is not the same as "rates are falling." Now is the time to confirm you are on a competitive rate. Use our [refinance savings calculator](/calculators/refinance-savings) to see how much a rate difference would affect your monthly repayments.

**Refinancers** are in the strongest position. With further rises looking increasingly unlikely, lenders have less leverage to hold wide margins, and competition for quality borrowers remains real. If you haven't reviewed your rate in the past 12 months, start with our [refinance home loans page](/home-loans/refinance) to compare what's available.

**First home buyers** should note that the softening in affordability and consumer confidence is creating conditions that can work in favour of well-prepared, patient buyers. Check today's options on our [cheapest home loans page](/home-loans/cheapest).

**Investors** need to tread carefully. The combination of slower house price growth, tightening credit conditions, and evolving tax policy creates a more complex environment than a year ago. If you are considering entering or expanding your portfolio, review what's currently available on our [investor home loans page](/home-loans/investor).

CBA's own data shows that Australian consumers have remained "relatively resilient to date, with limited evidence so far of a broad slowdown in spending despite weak consumer sentiment overall." That resilience provides some cushion for the housing market — but it is not an invitation to overextend. The rate cycle looks like it's done. Use this window to make sure your mortgage is working as hard as it should.