Westpac hikes again as the fixed rate tide continues to rise
12 Dec 2025
Westpac has today hiked its fixed home loan rates by up to 0.35 percentage points on the back of confirmation from the RBA that a rate hike could be on the cards in 2026.
This is the second time the big bank has hiked its fixed rates in just over a month, with the last increase on 12 November.
As a result, its lowest fixed home loan rate is now 5.49%.
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| Westpac fixed rate changes today | |||
|---|---|---|---|
| Term | Old rate from | New rate from | Change %-pts |
| 1-year | 5.24% | 5.49% | +0.25 |
| 2-year | 5.24% | 5.59% | +0.35 |
| 3-year | 5.39% | 5.69% | +0.30 |
| 4-year | 5.59% | 5.89% | +0.30 |
| 5-year | 5.59% | 5.89% | +0.30 |
Source: Canstar. Notes: Rates based on owner-occupier fixed-rate loans. LVR requirements apply.
Fixed rates jump on the back of concerning inflation data
A total of 12 lenders have hiked at least one fixed rate in the past week. This includes Westpac, St George, Bank of Melbourne, BankSA, ING, HSBC, Suncorp and Australian Mutual Bank, which until yesterday had the lowest fixed rate in the market.
Rate tracking shows there are now just 29 lenders offering at least one fixed rate below 5%, a drop down from 43 a month ago.
What the big four bank economists are saying
CBA, NAB and ANZ’s cash rate forecasts no longer have further cuts. While none have factored in rate hikes, all three warn a rate hike is a possibility next year:
- CBA: “the door has been opened for a rate hike as early as February.”
- NAB: “February is now a live meeting for a rate hike.”
- ANZ: “the risks of an early 2026 rate hike are rising.”
Westpac’s economic team still expects two further cash rate cuts next year in May and August, however, the team has acknowledged that “the probability of a rate hike has risen.”
Fixed vs variable – which one comes out ahead?
Canstar 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 and there were two cash rate cuts in in May and August of next year, as Westpac is forecasting, they would pay an extra $1,920 in interest over the next two years.
If, however, there are two cash rate hikes at roughly the same points, the fixed rate would come out ahead over the next 2 years by $6,697. These scenarios are estimates and do not include fees, extra repayments or out-of-cycle rate changes.
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| Lowest 2-year fixed vs the lowest variable: $600,000 loan | ||||||
|---|---|---|---|---|---|---|
| Rate | Interest paid – next 2 years | |||||
| 2 cuts | 1 cut | No change | 1 hike | 2 hikes | ||
| 2-yr fixed | 4.79% | $56,301 | $56,301 | $56,301 | $56,301 | $56,301 |
| Variable | 4.99% | $54,381 | $56,343 | $58,686 | $61,031 | $62,998 |
| Difference | -0.35% | $1,920 | -$42 | -$2,385 | -$4,730 | -$6,697 |
Source: Canstar.com.au. Notes: calculations are estimates for illustrative purposes only, based on an existing owner-occupier paying principal and interest with a $600k loan in January 2026 and 25 years remaining. Assumes first cash rate cut or hike is in May 26 and the second in Aug 26. 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. Borrowers should seek personal financial advice.
Canstar’s data insights director, Sally Tindall says, “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.”
“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.
“If you’ve been thinking about fixing, do your research but don’t sit on your hands. There are still 29 lenders on the Canstar database with at least one fixed rate under 5 per cent. While they’re not all going to disappear overnight, borrowers will find they have a shrinking range of lenders to pick from.
“For those that like the idea of locking in some certainty, make sure you are across the extra restrictions that come with fixed rates and understand that, while we’ve lurched back to the possibility of rate hikes, it could swing the other way in the blink of an eye.”
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| Lowest fixed rates on Canstar | ||
|---|---|---|
| Term | Lender | Lowest rate from |
| 1-year | Pacific Mortgage Group | 4.84% |
| 2-year | Community First/Illawarra CU | 4.79% |
| 3-year | Horizon Bank | 4.84% |
| 4-year | Teachers Mutual Group, Freedom Lend | 5.24% |
| 5-year | Teachers Mutual Group, Freedom Lend | 5.24% |
Source: Canstar. Rates based on owner occupier fixed rate loans. Excludes first home buyer, green only and other special condition loans. LVR requirements apply.
| Big four bank lowest fixed rates | ||||
|---|---|---|---|---|
| CBA | Westpac | NAB | ANZ | |
| 1 year | 5.49% | 5.49% | 5.29% | 5.29% |
| 2 years | 5.44% | 5.59% | 5.19% | 5.19% |
| 3 years | 5.34% | 5.69% | 5.29% | 5.34% |
| 4 years | 5.79% | 5.89% | 5.69% | 5.74% |
| 5 years | 5.94% | 5.89% | 5.69% | 5.74% |
Source: Canstar. Rates based on owner occupier fixed rate loans. LVR requirements apply.
This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.
