Fixed home loan rates are edging higher across the market as lenders respond to growing expectations that the Reserve Bank’s next move could be a hike rather than another cut, according to Canstar’s latest Weekly Rate Wrap-up.
The moves come as the Reserve Bank (RBA) heads into its final monetary policy meeting of 2025, with most market players expecting the cash rate to stay at 3.6% while warning that stubborn inflation means the next move could ultimately be up rather than down.
Over the week, eight lenders increased 180 owner‑occupier and investor fixed rates, with an average rise of 0.19%. At the same time, P&N Bank cut one owner‑occupier variable rate by 0.14%, highlighting the continued divergence between fixed and variable pricing.
Sally Tindall (pictured), Canstar.com.au’s data insights director, said fixed rates are moving in step with shifting expectations for the cash rate.
“Fixed rates continue to rise alongside the possibility the next move from the RBA will be up, rather than down, with hikes from eight different banks including Macquarie Bank, Newcastle Permanent, and Suncorp,” Tindall said.
“While inflation looks to be unruly, employment appears to be tracking as expected, and the economy continues to move forward, the chips are still in the air and the direction of any of these data points could change tack over the course of the summer.”
Despite the upward pressure on fixed terms, Canstar’s database shows variable rates remain sharply priced.
The average variable interest rate for owner‑occupiers paying principal and interest is 5.9%. The lowest variable rate for any LVR is 4.99%, which is offered by Geelong Bank and Hume Bank.
For first‑home buyers, the same 4.99% rate is also available from G&C Mutual Bank, Horizon Bank, and Unity Bank.
There are 549 rates below 5.25% on Canstar’s database, down from 598 the week prior, indicating that while the pool of ultra‑low rates is shrinking, there are still many competitive options in the market.
Tindall said borrowers need to be realistic about the outlook for official rates – and proactive about chasing savings.
“At this stage, borrowers need to know three things," she said. "One, further rate cuts are now unlikely. Two, the next move could be up, rather than down, albeit not for some time. And three, mortgage relief at this stage, can only be guaranteed for someone who haggles with their bank or switches to a lower rate,” she said.
To compare with the previous week's rate movements, click here.
For borrowers still sitting on higher‑than‑necessary rates, the latest moves should act as a prompt to review their loans.
“While fixed rates are now on the rise, variable rates are still incredibly competitive, with a total of 43 different lenders offering at least one variable rate under 5.25%,” Tindall said. “If you’re an owner-occupier this is a wakeup call. If you’re not in this club, it's time to ask, why not?”
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