Two of Australia’s largest lenders have lifted fixed mortgage rates, a move that typically indicates where banks believe interest rates and costs of funding are trending and it’s not lower.
Commonwealth Bank and Westpac have both lifted fixed rates this week, with Westpac increasing fixed rates by up to 0.30% points and CBA increasing fixed rates by up to 0.25% points.
The move comes just weeks after the Reserve Bank of Australia lifted the cash rate by 0.25% points to 3.85%, its first increase in two years as it warned that inflation pressures were proving more persistent than expected.
New inflation figures this week are unlikely to calm household worries.
The ABS reported that annual CPI inflation remained at 3.8% in January 2026, while trimmed mean inflation a key underlying measure closely watched by the RBA, rose to 3.4%.
Fixed rates are not directly set by the RBA. They are highly sensitive to wholesale funding markets and the cost of hedging, which can move rapidly as traders bet on the next change in official rates.
The RBA has observed that increased expectations of the cash rate have lifted bank bill swap rates and some term deposit rates, which contribute to banks’ funding costs.
Canstar explained that CBA’s recent change means that its lowest fixed rates are now beginning with a six, while Westpac’s one to three year fixed rates remain beginning with a five.
Markets are increasingly betting on another hike later in the year, with May considered a live meeting if inflation does not ease.
The ASX’s RBA rate tracker indicates market pricing that can move rapidly after each data release.
The bank rate changes are not a guarantee of another RBA rate hike, but they are certainly a signal that lenders are preparing for higher funding costs and a longer period of higher rates.
