The Shocking Truth: Banks Raise Rates, Leaving Homebuyers in a Bind
In a move that has left many homebuyers and refinancers reeling, 53 lenders have increased their rates since the last RBA board meeting, potentially closing the window of opportunity for lower rates. But here's where it gets controversial: two lenders have taken the bold step of raising variable interest rates, and over 50 banks have hiked fixed home loan rates, just days before the RBA's crucial February 3rd meeting.
According to exclusive data from Canstar, a mass repricing event has occurred, with 53 Australian lenders adjusting their fixed home loan rates since the Reserve Bank's December 9th meeting. This includes the country's four largest banks, who have increased rates by as much as 70 basis points. A concerning development, indeed, for the majority of home loan holders.
In the past week alone, two lenders have made their move, increasing six owner-occupier and investor variable rates by an average of 0.1 points. Heritage Bank and People's Choice are the lenders in question, effectively implementing what amounts to a half-point rate rise by the Reserve Bank. The timing is significant, given the upcoming February monetary policy meeting.
Canstar's data insights manager, Sally Tindall, sheds light on the banks' response to the RBA's actions: "When the RBA Governor hints at a potential cash rate hike, as Governor Bullock did in December, banks take notice." Indeed, over half of the lenders on Canstar's database have hiked at least one fixed rate since the last RBA board meeting, with all four big banks included in this group.
The last time Governor Michele Bullock agreed to a rate hike was on November 7, 2023, increasing rates by 25 basis points to 4.35%. This decision was made due to the persistent issue of inflation, which Bullock considered "still too high" when compared to the expected rate of 3.5% by the end of 2024. Now, all eyes are on the upcoming December inflation data, set to be released on January 28th.
The current inflation rate stands at 3.4% as of November, down from 3.8% the previous month, but still above the RBA's target range of 2-3%. Housing costs are a significant contributor, with an annual rise of 5.2%, at a time when the RBA is aiming to cool the market.
Commonwealth Bank took the hardest stance on fixed rates, increasing its three-year fixed rate by a substantial 70 basis points to 6.04% on January 15th. This move resulted in some borrowers facing an extra $200 per month in repayments. Macquarie Bank also joined the trend, lifting rates by 0.25% across all fixed terms, marking its second hike in just six weeks.
"Fixed rates starting with a '4' are now in the banks' crosshairs. Only 12 lenders are offering rates below 5%, down from over 40 just three months ago," Ms. Tindall warns. "This is a preemptive move by the banks to prepare for a potential higher cash rate in 2026. Borrowers need to start getting ready."
The list of lenders who have repriced their offers includes major players like ANZ, NAB, and Westpac, as well as their subsidiaries, regional banks, credit unions, and even foreign banks. Both CBA and NAB are predicting a 0.25% rate rise on February 3rd, while Citi economists expect two hikes this year. However, the market remains skeptical, with the ASX rate tracker pricing in only a 25% chance of an increase to 3.85% and a 75% chance that the RBA will hold steady.
Next Wednesday's quarterly inflation results are critical, according to Ms. Tindall. "While the RBA emphasizes that its decision-making is not based on any single dataset or number, next Wednesday's inflation results are a key factor. If inflation shows a concrete improvement, it may be enough to prevent a hike at the first meeting of 2026. But if it remains stagnant, tough conversations will be had, and we could see a rate increase."
If the RBA decides to increase the cash rate target this year, it will mark the first such increase since November 7, 2023. For owner-occupiers on variable rates, the average is currently 5.52%. However, borrowers with a solid track record should aim for a rate of 5.25% or lower, as over 40 lenders are currently offering at least one variable rate under this mark.
"Now is the time to scrutinize your current home loan and challenge your lender for a better deal. The disparity between market leaders and laggards is widening, and loyalty is not always rewarded," Ms. Tindall advises. "For those still hoping to secure a fixed rate under 5%, the window is closing, but there's still time. Fixed rates under 5% may soon become a thing of the past."
Ms. Tindall emphasizes the importance of due diligence, even as the window narrows. "Fixed rates come with additional rules and restrictions. These include caps on extra repayments, often no access to offset accounts, and break fees if you want to exit early. Borrowers need to carefully consider these factors before locking in."
According to Canstar's calculations, a single 0.25 percentage point interest rate hike could increase a typical $600,000 mortgage repayment by $90 per month. A $750,000 loan would see an increase of $112, while $1 million mortgages would face an additional $150 per month in costs. Ms. Tindall urges borrowers to stress-test their budgets against potential rate increases to ensure their financial buffer is sufficient.
Here is the full list of lenders who have hiked their rates:
Fixed Rates (December 10, 2025 - January 21, 2026):
- ANZ
- Aussie
- Australian Military Bank
- Australian Mutual Bank
- Auswide Bank
- Bank Australia
- Bank First
- Bank of China
- Bank of Melbourne
- BankSA
- BCU Bank
- Bendigo Bank
- BOQ
- Commonwealth Bank
- Community First Bank
- Easy Street Fin Services
- Firefighters Mutual Bank
- Firstmac
- G&C Mutual Bank
- Geelong Bank
- Great Southern Bank
- Health Professionals Bank
- Heritage Bank
- Homestar Finance
- Horizon Bank
- HSBC
- Hume Bank
- Illawarra Credit Union
- IMB
- ING
- loans.com.au
- Macquarie Bank
- ME
- MyState Bank
- NAB
- P&N Bank
- Pacific Mortgage Group
- People's Choice
- Police Bank
- Police Credit Union
- Qudos Bank
- Queensland Country Bank
- RACQ Bank
- St George Bank
- Summerland Bank
- Suncorp Bank
- Teachers Mutual Bank
- The Mutual Bank
- Ubank
- UniBank
- Unity Bank
- Up
- Westpac
Variable Rates (January 12 - 18, 2026):
- Heritage Bank
- People's Choice
(Source: Canstar.com.au - 21/01/2026)
(Based on owner-occupier and investment loans on Canstar's database, available for any loan amount and LVR)
And this is the part most people miss: the impact of these rate hikes on your finances. A small increase in interest rates can have a significant impact on your monthly repayments. It's crucial to stay informed and prepared, especially in these uncertain economic times. What are your thoughts on the recent rate hikes? Do you think the RBA will hold steady, or are we in for a rate increase? Share your insights in the comments below!
