Rate increases narrow sub-5% options for borrowers as markets await next week’s inflation data
Two Australian lenders have raised variable home loan rates and more than 50 have increased fixed rates in the lead-up to the Reserve Bank of Australia’s (RBA) first monetary policy meeting of 2026.
Since the RBA board met last month, 53 lenders have repriced fixed rate home loans, including all four major banks, with some increases of up to 70 basis points, according to data compiled by Canstar.
In the variable-rate market, two institutions increased a total of six owner-occupier and investor variable rates over the past week, with average rises of 0.10 percentage points. Heritage Bank and People’s Choice were the lenders to move, with changes equivalent to half of a standard RBA cash rate adjustment.
“When the RBA governor announces a cash rate hike could be on the cards, as she did back in December, banks take notice,” said Sally Tindall (pictured right), data insights manager at Canstar.com.au. “Well over half of the lenders on the Canstar database have hiked at least one fixed rate since the last RBA board meeting, including all four big banks,” she said.
The RBA last lifted the cash rate in November 2023, increasing it by 25 basis points to 4.35%. The move followed inflation remaining “still too high” when it had been expected to be around 3.5% by the end of 2024.
Attention now turns to the December quarter inflation figures, due Jan. 28. Annual inflation eased to 3.4% in November from 3.8% in October, but remains above the RBA’s 2–3% target band. Housing was the largest contributor, with prices up 5.2% over the year at a time when the central bank is seeking to cool demand in the property market.
Among the major banks, Commonwealth Bank delivered one of the largest fixed-rate moves on Jan. 15, lifting its three-year fixed rate by 70 basis points to 6.04%. For some borrowers, this implies more than $200 extra in monthly repayments. Macquarie Bank increased fixed rates by 0.25 percentage points across all terms, its second rise in six weeks.
“Fixed rates starting with a ‘4’ now have a target on their backs,” Tindall said. “Just 12 lenders are offering at least one rate under 5%, down from over 40 just three months ago. This is a pre-emptive move by the banks to counter a higher cash rate in 2026. This is yet another signal that borrowers need to start getting prepared.”
ANZ, NAB and Westpac, as well as their subsidiary brands Bank of Melbourne, BankSA and St.George, have also repriced fixed rates. A range of regional banks, credit unions and foreign banks have followed suit.
For owner-occupiers on variable rates, the average rate currently sits at 5.52%, according to Canstar. Tindall said that borrowers with strong repayment histories should not be settling for that benchmark. She said borrowers “should be aiming at or below a 5.25% rate – with over 40 lenders offering at least one variable rate under that mark right now.”
“For those still hoping to fix under 5%, you haven’t missed the boat entirely, but the clock is ticking. Fixed rates under 5% could be relegated to the past by the time the next RBA decision comes around.”
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