Major bank hikes fixed rates despite saying more RBA cuts on the way

Friday, 12 December 2025 14:28

The Reserve Bank held off on a rate rise on Tuesday, but the bad news has come today for many mortgage-holders.

Westpac has hiked its fixed-rate mortgages, despite predicting the Reserve Bank will hand down two interest rate cuts next year.

The big four bank announced this morning it is increasing the rate on its fixed-rate home loans by between 0.25 and 0.35 percentage points.

Its lowest offer, for a one-year fixed term, is now sitting at 5.49 per cent, while its rate for four and five years is up to 5.89 per cent.

Westpac is the 12th bank to have hiked a fixed rate in the past week, and its move comes just days after RBA Governor Michele Bullock suggested she and her monetary policy board are done cutting rates this cycle.

"With what we know at the moment, I don't think there are interest rate cuts on the horizon for the foreseeable future," she said after holding the official cash rate at 3.60 per cent on Tuesday.

"The question is, is it just an extended hold from here, or is it a possibility of a rate rise?"

According to analysis by Canstar, there are now just 23 lenders offering a fixed rate below 5 per cent.

RBA governor Michelle Bullock at a press conference.

A month ago, that number was sitting at 43.

"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," Canstar data insights director Sally Tindall said.

"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."

Debit cards from the big four banks - Commonwealth Bank, NAB, Westpac, ANZ

However, Westpac's decision to increase fixed rates for borrowers comes despite it being the last remaining big four bank to forecast the cash rate will come down in 2026.

It is still predicting two rate cuts next year, while Commonwealth Bank, NAB and ANZ have forecast rates to remain steady, while warning the risk of a hike is rising.

Following Tuesday's RBA decision, the market was pricing in a 27 per cent chance of a rate increase in February, and that the cash rate will sit at around 4.1 per cent at the end of 2026.

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