Westpac has this afternoon brought its cash rate forecast forward, announcing it now expects the RBA to deliver a 0.25 percentage point hike at the end of its next Board meeting in just 11 days.
NAB is the only other major bank with a September rate rise in its forecast. CBA and ANZ expect another hike in November, although both have said it's possible it could come in September.
Westpac has flagged that an additional rate hike may be required, although its long-term forecast for cash rate cuts from August 2027 has not changed.
Big banks cash rate forecasts | ||
|---|---|---|
Next move | When | |
CBA | +0.25 | Nov 2026 |
Westpac | +0.25 | Sep 2026 |
NAB | +0.25 | Sep 2026 |
ANZ | +0.25 | Nov 2026 |
Source: Prepared by Canstar.
A 0.25 hike in September would add $91 to the monthly repayments for a borrower with a $600,000 loan at the start of the hikes in 2026.
If there is another 0.25 hike in November, repayments will increase by $92, and across what would be five rate hikes, that borrower would be paying an extra $456 per month on their mortgage.
Impact of 0.25 cash rate hikes on monthly repayments | ||||
|---|---|---|---|---|
Loan size at start of hikes | Hike in Sep | Cumulative increase across 4 hikes | Hike in Nov | Cumulative increase across 5 hikes |
$600,000 | +$91 | $364 | +$92 | $456 |
$750,000 | +$114 | $454 | +$115 | $570 |
$1 million | +$152 | $606 | +$153 | $759 |
Source: Canstar. Notes: Based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2026 at the RBA avg variable rate. Assumes rate hike in Sep and Nov and banks pass it on the month after. Changes are to minimum repayments.
Australia no longer hiking in isolation
The RBA has been hiking rates since February of this year, however, many other central banks are back to hiking official rates including the United States Federal Reserve, the Reserve Bank of New Zealand and the European Central Bank.
Cash, inflation and unemployment rates around the world | |||||
|---|---|---|---|---|---|
Official cash rate | Last change | Headline inflation | Core inflation | Unemployment | |
Australia | 4.35% | +0.25%, May 26 | 3.5% | 3.6% | 4.5% |
United States | 3.75% - 4.00% | +0.25%, Sep 26 | 3.4% | 2.4% | 4.1% |
United Kingdom | 3.75% | -0.25%, Dec 25 | 3.1% | 2.6% | 4.9% |
European Union | 2.65% | +0.25%, Sep 26 | 3.2% | 2.4% | 6.4% |
Canada | 2.25% | -0.25%, Oct 25 | 3.0% | 1.9% | 6.4% |
New Zealand | 2.75% | +0.25%, Sep 26 | 4.1% | 2.6% | 5.6% |
Japan | 1.25% | +0.25%, Sep 26 | 1.9% | 1.7% | 2.1% |
Source: Prepared by Canstar. Note ECB refers to the main refinancing rate. New Zealand core inflation is trimmed mean.
Now's the time to make a plan for your mortgage
Canstar’s Data Insights Director, Sally Tindall, says, “Any hope we might finish the year with just three rate hikes under our belts, rather than four, is fast disappearing with Governor Bullock confirming today the last round of inflation results did not move according to plan.”
“The fact that Westpac has now brought forward the timing of the next cash rate hike in its forecast comes as no surprise. The bank is already hiking its fixed rates in preparation for a higher cash rate.
“If the Board hikes in September, a borrower with a $600,000 debt at the start of the hikes this year, with 25 years remaining, is looking at a total increase to their mortgage repayments in 2026 of $364.
“Two more hikes before the year’s out and that figure starts nudging half a thousand dollars at $456. That’s not a one-off expense, but how much extra a typical borrower might have to shell out every single month until cash rate cuts materialise, which might not happen in the foreseeable future.
“If you’re someone with a mortgage the best thing you can do is to make a plan. Understand how high your repayments will climb if another 0.50 was added to your interest rate.
“Even if you can clear this amount, it's worth spending the next couple of weeks working out how you can get yourself on a lower starting rate. That might be by refinancing to a rate under 6 per cent but even haggling with your current bank can at least get the ball rolling. That’s a call you’ll want to make by the end of next week at the latest.”
