No, interest rates did not go down in 2023; instead, they generally continued to rise or stayed at high levels as central banks, like Australia's RBA, fought inflation, with predictions suggesting any decrease wouldn't start until late 2023 or more likely 2024, with the focus on peaking rates rather than cuts for much of the year.
Will Mortgage Rates Ever Go Down to 3% Again? While it's possible that interest rates could return to 3% territory in the future, it's highly unlikely that it'll happen anytime soon. In fact, some experts say it won't happen again without another major economic shock like the one caused by the COVID-19 pandemic.
Interest Rate in Australia is expected to be 3.60 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Australia Interest Rate is projected to trend around 4.10 percent in 2026, according to our econometric models.
locking now is the safer move. No one can predict short term rate changes with certainty and waiting could backfire if they jump. You can always refinance later if rates drop enough to make it worth it.
When the RBA cuts rates, borrowing typically becomes cheaper, but lenders don't always pass on the full reduction to customers. At its 12 August 2025 meeting, the RBA cut the cash rate by 0.25 percentage points to 3.60%. It was the third cut of the year, taking total easing in 2025 to 75 basis points.
Experts' interest rate prediction for 2025 suggests that while rates may decrease, they may not drop significantly. According to some financial institutions, the average 30-year fixed mortgage rate could settle between 5.5% and 6.5% by mid-2025.
While many experts warned of a recession for Australia in 2025 due to high inflation and interest rates, the economy largely avoided a major downturn, showing resilience with positive, albeit slower, GDP growth, low unemployment, and some signs of recovery by late 2025, though risks remained, particularly concerning household spending and global trade tensions. Forecasts from the Reserve Bank of Australia (RBA) and economists indicated a "slow grind" or modest improvement rather than a sharp crash, with some analysts predicting a potential for recession into 2026, but overall, Australia navigated the challenges better than initially feared.
At the time of writing (January 2026), the average monthly repayments on a £70,000 mortgage are £369. This is based on current interest rates being around 4%, a typical mortgage term of 25 years, and opting for a capital repayment mortgage. Based on this, you would repay £110,846 by the end of your mortgage term.
Whether you should fix your mortgage for 2 or 5 years depends on you and your individual circumstances. Fixing your mortgage for 2 years can give you certainty and stability in the short-term, and can also be the right choice if you only plan on staying in your home for a few years.
Taking Advantage of a Decrease: If interest rates drop after you've locked in your rate, but before your closing, you can request a Mortgage rate float down.
You can negotiate a lower credit card interest rate by calling the issuer and asking for a rate reduction. Prioritize asking the company with whom you have the longest history as a customer, and to whom you've most consistently made on-time payments.
Westpac Economics has revised its outlook for the RBA cash rate to an extended hold for the whole of 2026. While the RBA recognised that some of the recent inflation surprise reflected temporary factors, it has clearly taken signal from it.
Avoid loans with APRs higher than 10% (if possible)
"That is, effectively, borrowing money at a lower rate than you're able to make on that money."
Mortgage loans are amortized, which means payments are structured so that early installments mostly go toward interest, while later ones pay down more principal. As a borrower, it's important to understand how amortization works to see how your payment mix changes over time.
Fannie Mae predicts that mortgage rates will start off 2026 at 6.2% and drop to 5.9% by the end of the year. On the other hand, the Mortgage Bankers Association sees mortgage rates holding steady at 6.4% this year. Whether mortgage rates decline notably in 2026 could hinge largely on broad economic activity.
Current Forecasts and Expert Opinions
The short answer is: It's highly unlikely we'll see mortgage rates drop back to 3% anytime soon. However, recent inflation numbers point to cooling of the pace of inflation.
Current Average Rates: As of now, the average rate for a five-year fixed-rate mortgage is 4.89%, slightly up from last week's 4.84%.
While the possibility of job loss can trigger financial panic, Orman advises against rushing to drain your savings to pay off your mortgage early. Even if you have enough money saved to wipe out your mortgage, don't pull the emergency cord until absolutely necessary.
A $70,000 annual salary puts you in a strong position to buy a home, with most buyers at this income level qualifying for houses priced between $210,000 and $290,000. Your exact buying power depends on several key factors that lenders evaluate during the mortgage approval process.
Finder's Consumer Sentiment Tracker of 1,310 respondents revealed 2 in 5 (43%) Australians – equivalent to 9.2 million people – have less than $1,000 in their bank account. Of those who have less than $1,000 on hand, the average bank balance is just $215 – barely enough to pay for groceries.
The Most Important Recession Indicators You Need to Watch Right Now:
However, the "First World" is generally thought of as the capitalist, industrial, wealthy, and developed countries. This definition includes the countries of North America and Western Europe, Japan, South Korea, Australia, and New Zealand.