In a move that signals tightening financial conditions for homeowners, two of Australia's major lenders have proactively increased interest rates on fixed-term mortgages. This action comes just weeks before the Reserve Bank of Australia (RBA) is widely forecast to lift the official cash rate.
Banking Giants Move Ahead of Central Bank
Commonwealth Bank (CBA), one of the nation's 'Big Four' banks, implemented changes on Thursday, raising rates across its fixed home loans for both owner-occupiers and investors. The most significant increase was a substantial 0.7 per cent jump applied to three-year fixed loans for owner-occupiers, pushing the rate to 6.19 per cent. For investors on a similar three-year term, the rate rose by 0.6 per cent to 6.24 per cent.
Following suit, Macquarie Bank also lifted its interest rates this week, applying a uniform 0.25 per cent increase across all of its fixed loan products. These adjustments apply to new borrowers and existing customers looking to switch to a fixed rate, placing immediate pressure on household budgets.
Comparing the Market and the Looming RBA Decision
For customers now compelled to shop around, the landscape varies. The lowest fixed rate now available at CBA is a two-year loan for owner-occupiers at 5.94 per cent, following a 0.35 per cent rise. However, better deals can be found elsewhere. Westpac offers a two-year fixed rate at 5.59 per cent, while ANZ comes in at 5.44 per cent for owner-occupiers.
According to financial comparison site Canstar, the most competitive two-year fixed rate on a $500,000 loan is currently offered by NRMA Insurance at 5.29 per cent, followed by Suncorp and NAB at 5.39 per cent.
All eyes are now firmly fixed on RBA Governor Michele Bullock ahead of the board's next meeting on February 3. Both CBA and NAB economists predict the central bank will raise the cash rate by 0.25 percentage points. This would be the first increase since the RBA paused at 3.60 per cent in August last year, following a series of aggressive hikes.
Financial Impact and Inflationary Pressures
The potential RBA move would have a direct and tangible impact on variable rate mortgage holders. A 0.25 per cent increase would add approximately $75 per month to repayments for someone with a $500,000 owner-occupier loan over a 25-year term.
Sally Tindall, Canstar's Data Insights Director, noted that while inflation is moving in the right direction, underlying pressures remain. "Trimmed mean inflation has been at or above three per cent for five consecutive months," she said. "What this tells us is that the current cash rate setting might not be high enough to bring inflation back down to its target of 2.5 per cent."
Tindall emphasised that the next round of quarterly inflation figures, due just six days before the RBA's February decision, will be critical. Looking further ahead, forecasts diverge: NAB has predicted a second RBA hike in May, while Westpac and ANZ expect the cash rate to remain steady throughout 2026.
