Fixed rates rocket as major banks warn of RBA hikes

Two of the big four banks now expect the Reserve Bank of Australia (RBA) to raise interest rates at its first meeting of the new year, while the remainder don't forecast relief anytime soon. 

The shift has likely reignited the fixed-versus-variable debate for many mortgage holders, perhaps those still scarred by the rapid tightening cycle of 2022 and 2023 in particular.

Fixed rates tend to move ahead of changes to the RBA's cash rate, as lenders price in future expectations.

The recent round of repricing suggests banks and smaller lenders alike are becoming less confident more rate relief is around the corner - even if the cash rate remains on hold.

CommBank and NAB shifted gears on Tuesday in response to new inflation predictions, with the former now expecting a February hike and the latter predicting hikes in both February and May.

Westpac wasn't far behind, with chief economist Luci Ellis scrapping previous forecasts of 2026 rate cuts and putting forward new expectations of a prolonged pause.

"Inflation is expected to moderate in 2026, but not soon enough to induce the RBA to step back from its current hawkish view of the risks," Dr Ellis said on Wednesday.

"We think that rate hike talk is premature. We cannot rule out that more near-term bad news on inflation spooks the RBA and induces a near-term hike, but in our view, it is not the most likely outcome."

Dr Ellis also noted that, if all goes how Westpac expects, rate cuts could be back on the table in early 2027.

ANZ is also forecasting an extended cash rate hold in 2026, though notes hikes present a risk, particularly early in the year.

Which lenders hiked fixed rates this week?

Already, 16 lenders in the YourMortgage.com.au database have upped fixed interest rates this week, including big four bank NAB.

Looking further back, Westpac and Macquarie Bank have each hiked fixed rates twice in November and December, while CommBank scrapped its 4.99% special fixed offer last month.

The latest moves largely saw fixed rates rising by between 20 and 90 basis points.

Notably, NAB-owned ubank recorded the largest fixed-rate increase this week, while several customer-owned banks raised fixed rates by 60 basis points or more:

Lender	Direction	Max change	Lowest advertised fixed rate (comparison rate)*
NAB	Increase	+0.20%	5.39% (6.06%*) - One year 5.39% (6.00%*) - Two years
Ubank	Increase	+0.90%	5.64% (5.66%*) - One year
RACQ Bank	Increase	+0.75%	5.74% (5.78%*) - Two & three years
Bank Australia	Increase	+0.60%	5.49% (5.40%*) - One year
Qudos Bank	Increase	+0.60%	5.49% (5.54%*) - One year
MyState Bank	Increase	+0.60%	5.59% (7.45%*) - One year
Auswide Bank	Increase	+0.60%	5.59% (5.77%*) - One year
Police Credit Union	Increase	+0.30%	5.39% (6.21%*) - One year
Horizon Bank	Increase	+0.30%	5.04% (5.69%*) - Two years 5.04% (5.63%*) - Three years
Great Southern Bank	Increase	+0.25%	5.34% (6.93%*) - Two years 5.34% (6.76%*) - Three years
BCU Bank	Increase	+0.25%	5.29% (5.47%*) - Two years 5.29% (5.46%*) - Three years
P&N Bank	Increase	+0.25%	5.29% (5.52%*) - Two years 5.29% (5.50%*) - Three years
Queensland Country Bank	Increase	+0.20%	5.29% (5.82*) - Two years (special offer)
Hume Bank	Increase	+0.20%	4.99% (5.29%*) - Two years (special offer)
Bank of China	Mixed	Up to +0.20%	5.19% (7.56%*) - One year 5.19% (7.32%*) - Two years
Summerland Bank	Hiked most, one cut	+0.25%	5.09% (5.81%*) - One year (special offer)

Above rates solely consider owner-occupier fixed rate home loans at the lowest LVR band offered by each lender as at the time of publication. Rates advertised as available to individual borrowers may differ.

There were also a few notable variable rate movements this week:

• The Capricornian hiked some variable interest rates by 5 basis points
• MOVE Bank dropped some variable interest rates by up to 25 basis points

Meanwhile, the merged G&C Mutual Bank & Unity Bank dropped the rate on their Essential Worker home loan by 21 basis points, with the product - offered exclusively to emergency and healthcare workers - now advertising a variable rate of 4.99% p.a. (5.04% p.a. comparison rate*)

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Important Information and Comparison Rate Warning

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Are variable rates next or is fixing now a mistake?

Rising fixed rates don't automatically mean variable rates are about to increase.

Fixed rates are driven by lenders' expectations of interest rate movements over the coming years, while variable rates tend to move in line with the RBA's cash rate.

As a result, fixed rates often react first, pricing in the risk of future rate changes rather than responding to current settings.

For borrowers, this can create a dilemma: fixing a home loan rate now can offer certainty if rates rise, but it also risks locking in at higher levels if the RBA holds steady or cuts sooner than expected.

Staying on a variable rate, meanwhile, preserves flexibility, and often access to features like offset accounts, but leaves borrowers exposed if rate hikes materialise.

Ultimately, the right choice depends on personal circumstances.

For many households, the decision is less about perfectly predicting the RBA and more about managing budgets, risk tolerance and cash-flow certainty.

_{Image created on Canva using assets courtesy of the Reserve Bank of Australia}