Fixed rates on the rise as inflation dashes chance of further cash rate cuts
26 Nov 2025
Another rise in inflation has put the possibility of cash rate cuts next year in greater doubt and could see further hikes to fixed rates in the weeks ahead.
Headline inflation has clocked in at 3.8% in October in original terms, up from 3.6% in the previous month, according to the first release of the expanded monthly Consumer Price Index from the ABS today.
The key contributors to the rise in annual inflation was housing (+5.9%) driven by soaring annual electricity price rises (+37.1%) due to the volatility created by state and federal government rebates, alongside annual rises in rents (+4.2%) and new dwelling costs (+1.7%).
Outside of housing, food and non-alcoholic beverages and recreation and culture both rose 3.2% annually in original terms.
Trimmed mean inflation rose to an annual rate of 3.3% in October, up from 3.2% in September, in seasonally adjusted terms.
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| Consumer Price Index (annual movement) | ||
|---|---|---|
| Month | Headline CPI% | Trimmed mean % |
| April 2025 | 2.4 | 3.1 |
| May 2025 | 2.1 | 3.0 |
| June 2025 | 1.9 | 2.8 |
| July 2025 | 3.0 | 3.0 |
| August 2025 | 3.2 | 3.0 |
| September 2025 | 3.6 | 3.2 |
| October 2025 | 3.8 | 3.3 |
Source: ABS Monthly Consumer Price Index.
Rate cut at December RBA meeting unlikely to be considered
Today’s monthly CPI results, while still in transition to a more comprehensive measuring system, rule out the possibility of a rate cut at the RBA’s next meeting on December 8 and 9, with the Board unlikely to even consider the case for a cut at this meeting.
Australia’s retreat in the fight against high inflation could, however, spark discussion around the possibility the cutting cycle is now over, and potentially look towards what factors might push the Board back to rate hikes.
All four big bank economic teams expect the cash rate to remain on hold at the December meeting. CBA and NAB believe we have seen the last of the cash rate cuts in this cycle.
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| Current big four bank cash rate forecasts | |||
|---|---|---|---|
| Bank | Next cut | Total cuts to come | Cash rate at end of cuts |
| CBA | – | 0 | 3.60% |
| Westpac | May 2026 | 2 | 3.10% |
| NAB | – | 0 | 3.60% |
| ANZ | February 2026 | 1 | 3.35% |
Fixed rates on the rise
While fixed rates are based on a range of factors, the last couple of rounds of CPI data, and the implications for the future of the cash rate, have seen an about-turn in some of these prices.
Canstar rate tracking shows since November 1, 18 lenders have hiked at least one fixed home loan rate. This includes hikes from Westpac and Macquarie Bank. By comparison, just nine lenders have cut at least one fixed rate in this time.
As a result, the number of lenders offering at least one fixed rate under 5% is starting to decline. Rate tracking shows there are currently 36 lenders offering at least one fixed rate below 5%, a drop down from 46 a month ago.
Nevertheless, the lowest fixed rate is still a competitive 4.64% for first home buyers for a term of 2-years, while the lowest fixed rate for existing home owners is 4.74% for a term of either 2- or 3-years.
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| Lowest fixed rates on Canstar | ||
|---|---|---|
| Term | Lender | Lowest rate from |
| 1-year | Pacific Mortgage Group | 4.84% |
| 2-year | Australian Mutual (first home buyers) | 4.64% |
| 3-year | Australian Mutual | 4.74% |
| 4-year | Teachers Mutual Group, Freedom Lend | 5.24% |
| 5-year | Australian Mutual | 5.19% |
Source: Canstar. Rates based on owner occupier fixed rate loans. Excludes green only loans. LVR requirements apply.
Is this the window to fix?
People looking for the ‘right’ time to fix in order to pay as little interest to their bank will be doing so with a degree of uncertainty, particularly at times such as this when the future of the cash rate is highly uncertain.
However, crunching the numbers on two scenarios, research found if an average owner-occupier with a $600,000 loan and 25 years remaining, switched to the lowest 2-year fixed rate instead of the lowest variable, they would pay an estimated $2,981 less in interest over two years, if rates stay on hold.
However, if there are two more cash rate cuts, as Westpac is forecasting in May and August of next year, and the banks passed on both cuts in full to variable rates, the person who had fixed at 4.74% would pay $1,072 more in interest charges than if they had stayed on variable.
These scenarios are estimates and do not include fees or out-of-cycle rate changes.
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| Lowest 2-year fixed rate vs the lowest variable for someone refinancing a $600,000 loan |
||||
|---|---|---|---|---|
| Rate from | Initial monthly repayment | Cost next 2 years – no more cuts | Cost next 2 years – 2 more cuts | |
| Lowest 2 year fixed rate | 4.74% | $3,417 | $55,705 | $55,705 |
| Lowest variable | 4.99% | $3,504 | $58,686 | $54,633 |
| Difference | -0.25% | -$87 | -$2,981 | +$1,072 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest with a $600k loan in December 2025 and 25 years remaining. Assumes cash rate cuts fall in May and August in line with Westpac’s forecast. Calculations are for illustrative purposes only. They only reflect the interest charges and do not include fees or any extra repayments. Lowest rates exclude first home buyer only, eco and introductory rate loans.
Canstar’s data insights director, Sally Tindall says, “Inflation is moving in the wrong direction and it’s taken the prospect of another rate cut completely off the table. The Board won’t just dismiss a December cut, it’s unlikely it’ll even entertain the idea.”
“Consumers were hoping for a bit more relief next year, but this latest CPI read has poured cold water over expectations. If anything, the conversation is now shifting to whether the cutting cycle has already run its course, and potentially, what it would take for the central bank to revert back to hikes.
“While the jump in annual electricity and rent inflation was amplified by the timing of government rebates, once you strip out this volatility, it’s clear these essential costs are still climbing.
“We’re already seeing fixed rates creep up as markets recalibrate their prices on the back of rising inflation. With another round of data confirming inflation is proving problematic, more hikes are likely to follow.
“The number of sub-5 per cent fixed rates is starting to shrink. Just a month ago there were 46 lenders offering at least one fixed rate under 5 per cent, now we’re down to 36. That’s a sizeable shift in a short space of time.
“That said, some of today’s lowest fixed rates are still sharp, particularly for people who want the safety of predictable repayments.
“If you are considering a switch to fixed, run the numbers based on a range of scenarios, but also take a step back and work out which option suits your finances better. Fixing can buy certainty, but it also means giving up the chance to benefit from any cuts. Don’t rush the decision, but instead shop around, because while some lenders are already on the move there’s still competitive rates to be found.”
This article was reviewed by our Consumer Editor Meagan Lawrence before it was updated, as part of our fact-checking process.
