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Aussie Mortgages Face Two Years of Pain
31 Mar
Summary
- Interest rates may not be cut for up to two years.
- Westpac forecasts three more rate increases in 2026.
- Sydney and Melbourne house prices expected to fall.
Australians holding mortgages have been alerted that they might need to endure up to two more years without an interest rate reduction, as further increases are anticipated. Westpac's projections suggest three additional 0.25 percentage point cash rate hikes in May, June, and August of 2026. This would bring the cash rate to 4.85 per cent, a level not seen since the Global Financial Crisis.
Furthermore, Westpac does not foresee any interest rate cuts until February 2028, indicating a sustained period of financial strain for mortgage holders. These revised forecasts are influenced by surging fuel costs, stemming from ongoing conflicts in the Middle East and their impact on global fuel supply disruptions.
In contrast, a glimmer of relief emerges for homebuyers as property prices in Sydney and Melbourne are showing signs of decrease. Sydney homes could see a fall of up to six per cent, with Melbourne potentially experiencing declines of up to four per cent. This downturn in the property market is attributed to the broader economic pressures and the expectation of continued high interest rates.
