Aussies brace for more interest rate hikes as major banks raise fixed rates
Two of the big four Australian banks have increased fixed rates, signaling potential further cash rate hikes in the coming months. Westpac and Commonwealth Bank (CBA) raised their fixed rates by 0.30 and 0.25 percentage points, respectively, following the Reserve Bank of Australia's (RBA) decision to raise the cash rate to 3.85%. This marks the second time CBA has hiked fixed rates in just six weeks, pushing all of its fixed rate options above six percent. Westpac's one, two, and three-year fixed rate home loans still start at five percent.
According to Canstar, NAB now offers the lowest fixed rates among the big four. However, fixed rates are rising across the board. Since the RBA's decision on February 3, around 60 lenders have hiked at least one fixed rate, effectively eliminating rates below five percent from the loan market. The lowest possible fixed rate now stands at 5.18% for a two-year term, offered by BankVic.
The latest rate increases cast doubt on any possibility of a rate decrease next month. The RBA will meet again in March and May before the government unveils its 2026 federal budget. Sally Tindall, Canstar's data insights director, attributes the rate hikes to elevated fixed rate funding costs and the expectation that cash rate hikes are not over. She also suggests that competition in the fixed rate space and customers' reluctance to lock in home loan rates may have played a role.
Tindall predicts that the trend of climbing fixed rates will persist if cash rate hikes continue in 2026. Aussies are urged to stay informed and prepared for further financial adjustments.
