Major lender’s second fixed rate hike in just over a month narrows sub-5% options
Westpac has increased a range of its fixed home loan rates by up to 0.35 percentage points following the Reserve Bank of Australia’s indication that an official cash rate increase in 2026 is now a possibility.
It is the second time in little more than a month that the major bank has raised fixed rates. Westpac’s lowest fixed home loan rate now sits at 5.49%.
The move comes as fixed pricing across the market continues to edge higher in response to recent inflation data and shifting rate expectations. According to Canstar, 12 lenders have increased at least one fixed rate over the past week, including Westpac, St George, Bank of Melbourne, BankSA, ING, HSBC, Suncorp and Australian Mutual Bank, which until yesterday offered the lowest fixed rate on the market.
Rate-tracking by Canstar shows that only 29 lenders are still offering at least one fixed rate below 5%, down from 43 a month earlier. This tightening at the lower end of the fixed rate market reduces the number of sub‑5% options available to brokers and their clients.
The shift aligns with a change in tone from the major banks’ economics teams. Forecasts from CBA, NAB and ANZ no longer build in additional cash rate cuts. While none of the three has formally pencilled in a hike, each now points to a higher risk of tightening next year.
Westpac’s own economics team still anticipates two further cash rate cuts next year, in May and August, but has conceded that “the probability of a rate hike has risen.”
“This 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.” said Sally Tindall, data insights director at Canstar.com.au. “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. Right now, NAB and ANZ have the lowest fixed rates out of the majors, however, these banks could hike their rates in coming weeks.”
“If you’ve been thinking about fixing, do your research but don’t sit on your hands,” Tindall added. “There are still 29 lenders on the Canstar database with at least one fixed rate under 5%. 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.”
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