- Westpac has raised fixed home loan rates for a second time in a month
- The bank's fixed mortgage rates have increased by up to 0.35% across the board
- The jump comes despite Westpac being the only bank among the big four whose economists are forecasting interest rate cuts in 2026
Westpac has lifted its fixed mortgage rates across the board - its second fixed-rate hike in a month.
Last month, Westpac was the first of the big banks to adjust rates higher after the Reserve Bank of Australia's decision to hold the cash rate at 3.60% at its November meeting.
On Tuesday, the RBA monetary policy board again elected to keep the cash rate on hold at its last meeting of the year.
Westpac's decision to lift fixed home loan rates appears to fly in the face of its economic team's position that there will be two more cash rate cuts in 2026.
But Westpac is the outlier among the big banks and more widespread analyst forecasts that the next move in the cash rate will be higher.
Westpac's new fixed home loan rates
Westpac's new featured home loan rate is now 5.59% p.a. (6.01% p.a. comparison rate*) for owner occupiers fixing for two years with up to 70% loan-to-value ratio (LVR) and making principal and interest (P&I) repayments as part the bank's Premier Advantage Package.
The package attracts an annual fee of $395 and includes an interest rate discount of 0.20% on Westpac's standard fixed home loan rates on loan amounts over $150,000, as well as a further 0.10% discount for borrowers with LVRs below 70%.
Here's a rundown of the new Premier Advantage package interest rates for owner occupiers making P&I repayments:
| Product | (%) change | New rate | Comparison rate* |
| 1 year ≤70% LVR | +0.25 | 5.49% p.a. | 6.00% p.a. |
| 70-80% LVR | +0.25 | 5.59% p.a. | 6.10% p.a. |
| 2 years ≤70% LVR | +0.35 | 5.59% p.a. | 6.01% p.a. |
| 70-80% LVR | +0.35 | 5.69% p.a. | 6.11% p.a. |
3 years ≤70% LVR | +0.30 | 5.69% p.a. | 6.03% p.a. |
| 70-80% LVR | +0.30 | 5.79% p.a. | 6.13% p.a. |
4 years ≤70% LVR | +0.30 | 5.89% p.a. | 6.11% p.a. |
| 70-80% LVR | +0.30 | 5.99% p.a. | 6.21% p.a. |
5 years ≤70% LVR | +0.30 | 5.89% p.a. | 6.13% p.a. |
70-80% LVR | +0.30 | 5.99% p.a. | 6.23% p.a. |
For those with LVRs over 80%, Westpac's headline interest rates are 0.30% higher than advertised 70-80% LVR rates.
Investor interest rates are generally 0.20% higher for those making P&I repayments and higher again for those choosing interest only (IO) repayments.
It's worth noting the rise in fixed home loan rates applies across the Westpac Group including its brands St George Bank, BankSA, and Bank of Melbourne.
Why is Westpac raising rates?
When Westpac raised its fixed home loan rates in November, it said:
"The change reflects the increased cost of fixed-rate funding and ensures our fixed home loan rates remain aligned with current market conditions."
It signals that although Westpac's economics team believes there may further cash rate cuts in 2026, its product team may be gearing up for rate rises.
Lenders need to anticipate market movements to ensure they're pricing in expected hikes in ongoing loan funding costs to protect their profit margins.
The movement of fixed rates is generally a good indication of which direction lenders expect interest rates to be heading into the future.
How do Westpac's fixed rates compare with other banks?
After a second fixed rate hike in a month, the latest increase puts Westpac's fixed home loan rates generally higher than corresponding products offered by other big banks.
NAB and ANZ are still offering a two-year fixed rates of 5.19% p.a. (6.12% comparison rate - NAB; 6.24% p.a. comparison rate - ANZ) for owner occupiers with 80% LVR and making P&I repayments as part of their home loan packages.
Macquarie Bank's lowest fixed rate is a one-year fixed rate of 5.34% p.a. (5.36% p.a. comparison rate*) for new owner occupier loans where LVRs are 70% or less.
CommBank's rates are higher but also generally below Westpac's newly raised rates.
It begs the question how long it may be before other lenders move to raise their fixed home loan rates.
Smaller lenders still offering rates under 5%
For those considering locking in their home loan interest rate amid market expectations of a rise in the cash rate, a number of smaller lenders and mutual banks are still offering fixed rates below 5%.
See also: Which home loans offer interest rates below 5%?
See also: Should you fix your home loan interest rate?
This week, the RBA was perhaps less hawkish than sections of the market in its assessment of economic conditions.
Although the RBA acknowledged inflation poses "upside risks" to the cash rate, it also said it believed some inflationary pressures may be temporary.
This is also the view of Westpac's economists.
But despite speculation over interest rate movements, the cash rate will remain hold until at least February 2026 when the next monetary policy board meeting is scheduled for 2-3 February.
It will come the week after key December quarter inflation data is due to be released on 28 January.
That may well hold the key to where the cash rate could head in the new year.
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
