We asked our panel of Australia’s leading economists and mortgage industry experts to give their recommendations on where they think the average standard variable rate will be at the end of 2009.

After recent rate cuts by the RBA and major lenders we calculated an average standard variable rate of 7.73% as at 18 November 2008. These predictions by no means reflect where the rates will be for the banks or other lending institutions surveyed, and are instead intended as a guide. Forecasts may have changed since the time of the survey, as at 18 November 2008.

"The average standard variable rate will be at 7.25% by the end of December 2009. We think we are in the early stages of a global recession, so predicting interest rates for a future date is infinitely more difficult. However, our prediction is based on early global indicators"
Ken Sayer, managing director and CEO, Mortgage House

"With the financial turmoil that has reverberated around the world over the last 15 months, and in particular in recent months, it can be risky to make predictions. However, based on the information at hand at time of writing, I feel the most likely outcome will be that the average standard variable rate will be reduced down to 6% by December 2009 (rates may even drop to 6% as early as September 2009)"
Darryl Simms, managing director, Access Loans P/L

"By the end of next year we expect the RBA to lower the cash rate to 4.5% in response to very weak economic growth, a rise in unemployment to 6.5% or more, and a sharp fall in inflation. This plus some contraction in the gap between mortgage rates and the cash rate as credit and money markets gradually improve is expected to see the banks' standard mortgage rates fall to around 6.7%"
Shane Oliver, head of investment strategy and chief economist, AMP Capital Investors

"The RBA is determined to do whatever it can to insulate the Australian economy from the effects of the global financial crisis. Inflation remains a problem, but it’s secondary right now. Accordingly, look out below… rates are coming down"
Chris Caton, chief economist, BT Financial Group

"Our best guess is that the base variable mortgage rate will be lower by December 2009, around 7.25%. The important advantage that Australia has is that we can take interest rates much lower than they are, if we need to. There is a great deal of room to move and so if the mortgage rate needs to head below 7% and towards 6%, that’s something that can happen. The US doesn’t have that luxury"
Harley Dale, chief economist, HIA

"The Reserve Bank will cut the cash rate by 1–1.5% points and improved funding conditions will allow banks to pass back some of the rate increases applied outside RBA action"
Craig James, chief economist, CommSec

"Given the actions taken by the government to support banks through guarantees on deposits and wholesale market borrowings, it is expected that bank borrowing costs will stabilise and start to improve. Accordingly, all of the RBA rate cuts should be able to flow through to mortgage rates"
Glenn Baker, head of treasury, ING Direct

"Although currently (highly) unpredictable, I see that monetary stance continuing for the next 12 months or so with average standard variable rates to reduce to approximately 6.50% pa around December 2009. The RBA is ignoring its hard and fast guideline of low and predictable inflation as the one single factor determining the setting of monetary policy in favour of expansionary monetary policy (ie lowering the cash rate) regardless of whether inflation is beyond its comfort zone. Thus, endeavouring to lessen the effect on our economy of any global recession, the RBA is providing domestic monetary stimulus by lowering rates. This has the dual effect of encouraging consumer borrowing by raising consumer confidence (and reducing fear) and the added bonus of a stimulus to export revenues as the Australian dollar falls along with the interest rate"
Martin Castilla, franchisee, Smartline Personal Mortgage Advisers

"I feel that the official cash rate will be 4.25% by December 2009 and lenders will continue to increase their margin over and above this. Given the lack of competition, my feeling is that lenders will gradually increase this margin to 270 basis points [from the current margin of 250 basis points]"
Phillip Minett, mortgage manager, Wizard Sydney CBD