Westpac is the latest big bank to change its cash rate forecast, with a hike now expected at the RBA’s November 2-3 meeting.
Westpac’s economic team believes the cash rate will peak at 4.60%, with cuts starting in August 2027.
The bank noted the shift in forecast comes on the back of stronger than expected household incomes and spending alongside greater investment in the 'data centre boom'.
Fellow big four banks CBA and ANZ also now predict the RBA will hike in November, while NAB expects the first hike to come in just three weeks’ time at the next Board meeting on September 28-29.
Big banks updated cash rate forecasts | ||
|---|---|---|
Next move | When | |
CBA | HIKE | +0.25 in Nov 2026 |
Westpac | HIKE | +0.25 in Nov 2026 |
NAB | HIKE | +0.25 in Sep 2026 |
ANZ | HIKE | +0.25 in Nov 2026 |
Source: Prepared by Canstar.
How much would another cash rate hike cost borrowers?
A 0.25 percentage point rate hike in November would add approximately $91 to the monthly repayment on a $600,000 loan with 25 years remaining, according to analysis by Canstar.
Across what would then be four rate hikes this year, the total increase to monthly repayments would be $363.
Impact of a further 0.25 hike on monthly repayments | ||
|---|---|---|
Loan size at start of hikes | Hike in Nov | Cumulative increase across 4 hikes |
$600,000 | +$91 | +$363 |
$800,000 | +$121 | +$484 |
$1 million | +$152 | +$605 |
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 Nov and banks pass it on the month after. Changes are to minimum repayments.
RBA tipped to hike, yet variable home loan rates keep falling
Canstar analysis shows lenders have continued to cut new customer variable home loan rates, despite the change in cash rate expectations.
Last week, eight lenders cut a total of 33 new customer variable rates, including Police Bank and Teachers Mutual group.
In total, since 1 June, 38 lenders have cut at least one variable rate, despite the RBA remaining on hold in this time. However, these rate cuts are reserved solely for new customers, as the banks look to refinancers to continue to grow their mortgage books in a sluggish property market.
RBA in rock and a hard place in September
Canstar's Data Insights Director, Sally Tindall, says, “Westpac’s change to its cash rate forecast is a timely reminder of just how uncertain the outlook is, and how quickly it can shift.”
“All four big banks still believe there will be cash rate cuts next year, but each one now expects at least one more hike to get the inflation job done first.
“NAB is the only big four bank expecting the RBA to pull the trigger this month, while CBA, ANZ and now Westpac are all pointing to November, giving the RBA the opportunity to digest two more rounds of CPI data before making its next move.
“The RBA is in a rock and a hard place in September, with the August CPI due the day after it meets. This means the Board has to make its call without an up-to-date read of the inflation data.
“Waiting would give the RBA two more inflation prints before making the call, however, if inflation comes in hotter than expected in the August data, due out the day after the RBA’s September meeting, the Board could end up lamenting not acting fast enough.
“Recent data might be pointing to rate hikes, yet new customer cuts keep rolling in. Last week, eight lenders on the Canstar database cut a total of 33 new customer variable rates.
“The property downturn continues to put pressure on lenders to bring in new business and the easiest way for them to do this right now is to coax customers from other banks’ books. It’s a perilous game of musical chairs for lenders, but a fantastic outcome for those existing borrowers who capitalise on the market fragility.
“A hike is waiting in the wings. The question is, will it materialise and when? At this stage, you would not rule out this month.”
