Westpac has raised its fixed home loan rates for the second time in just over a month, following warnings that the Reserve Bank could hike interest rates next year.
One-year fixed rates increased by 0.25 points to 5.49 per cent, while two-year fixed rates jumped by 0.35 points to 5.59 per cent. Three to five-year fixed rates all rose by 0.30 points.
The hike comes amid a broader trend across the sector, with 12 lenders, including St George, Bank of Melbourne, BankSA, ING, HSBC, Suncorp, and Australian Mutual Bank, increasing at least one fixed rate over the past week.
According to Canstar.com.au, the number of lenders offering a fixed rate below 5 per cent has dropped from 43 last month to just 29, as major banks adjust their forecasts.
CBA, NAB, and ANZ no longer expect further cash rate cuts, and while they haven’t included any rate hikes in their forecasts, all three caution that a rate increase could occur next year.
CBA warned that ‘the door has been opened for a rate hike as early as February,’ NAB described February as ‘a live meeting for a rate hike,’ and ANZ said ‘the risks of an early 2026 rate hike are rising.’
Despite those forecasts, Westpac’s own economists still expect two cash rate cuts next year, in May and August, but have acknowledged the probability of a rate increase has risen.
Canstar.com.au data insights director Sally Tindall said the latest round of fixed rate hikes from Westpac comes as no surprise, ‘on the back of a hawkish RBA, which has now put the country on notice that rate hikes are a possibility.’
‘The ink is barely dry on the RBA’s latest statement, and Westpac has already jumped. When the Governor indicates a rate hike is on the cards, lenders listen and fixed rates move. This won’t be the last fixed rate hike we see before the year is out.’
Westpac has raised its fixed home loan rates for the second time in just over a month, following warnings that the Reserve Bank could hike interest rates next year.
She advised Australians to carefully consider their options when it comes to locking in a fixed rate.
‘Right now, NAB and ANZ have the lowest fixed rates out of the majors; however, these banks could hike their rates in the coming weeks,’ Ms Tindall said.
‘If you’ve been thinking about fixing, do your research, but don’t sit on your hands. There are still 29 lenders on the Canstar database with at least one fixed rate under 5 per cent.
‘While they’re not all going to disappear overnight, borrowers will find they have a shrinking range of lenders to pick from.
‘For those that like the idea of locking in some certainty, make sure you are across the extra restrictions that come with fixed rates and understand that, while we’ve lurched back to the possibility of rate hikes, it could swing the other way in the blink of an eye.’
Earlier this week the Reserve Bank decided to keep the cash rate at 3.6 per cent, and Governor Michelle Bullock dismissed any remaining hope for borrowers expecting further rate cuts.
The RBA board was uncomfortable with the level of inflation, which spiked to 3.8 per cent in October – well above the two per cent to three per cent target band, she told reporters.
Strong economic growth, a tight jobs market and a lack of spare supply capacity in the economy mean the risks are more weighted to inflation coming in higher than expected, rather than lower.
What this all points to is no room for the RBA to lower rates again in 2026.
‘Is it just an extended hold from here, or is it possibility of a rate rise? I couldn’t put a probability on those, but I think they’re the two things that the board will be looking closely at coming into the new year,’ the governor said.
If the RBA does hike by 25 basis points in February, that would add almost $90 more in monthly repayments for an average borrower with a mortgage of $600,000.