The RBA may be weeks away from its first meeting for 2026, but some banks have provided an early indication of where the cash rate could be headed in the coming months, according to Compare the Market’s Economic Director David Koch.
“While you’ve been on summer holidays, most of Australia’s leading lenders had been increasing their interest rates on fixed rate, fixed term home loans,” Mr Koch said.
“That’s usually an indication that the trend in interest rates is going to be up.”
As an example, The Commonwealth Bank recently announced sweeping changes to its fixed-rate loans, with three‑year fixed owner‑occupied loans rising by as much as 0.70% to 6.04%.
NAB also announced changes to their tailored home loan fixed rates, with a two or three-year fixed rate for owner occupiers up 0.40%, one-year rates up 0.35%, and four and five-year fixed rates up 0.20% and 0.30% respectively.
Meanwhile, ME Bank lifted its three‑year fixed owner‑occupied principal and interest rate by 0.40% to 5.94%*. Dozens of other lenders have also moved their fixed rates, including Westpac, Aussie, Bendigo Bank, HSBC, BOQ and Bank of Melbourne, to name a few. Australians should check in with individual lenders about any changes to fixed-rate loans.
These moves are not limited to the major banks; a growing number of challenger lenders are also lifting fixed rates, adding to borrower concerns that the market is positioning for potential tightening in 2026.
The RBA will meet on 2–3 February, and its decision on whether to hold or hike interest rates will be heavily shaped by the December quarter Consumer Price Index (CPI) data, due for release on 28 January.
“Next week’s December quarter CPI figure will play a huge role in the Reserve Bank Board’s determination for interest rates at their board meeting on February 3,” Mr Koch said.
Mr Koch also explained what would need to happen to likely trigger an increase in interest rates.
“If that December quarter inflation figure is slightly above the 3% target range that the Reserve Bank sets for inflation, then it’s reasonable to expect interest rates to be on hold,” Mr Koch said.
“But if the momentum continues to increase and that inflation figure is well above the 3% level, then the Reserve Bank will be pondering increasing interest rates.”
Both the September quarterly CPI data and October monthly inflation data came in hotter than expected, which could be influencing lenders’ decision to lift rates. This, according to Kochie, is why the Reserve Bank will be laser‑focused on the December quarter inflation data.
But he warned that any increase in interest rates would have a direct and immediate impact on household budgets, particularly for borrowers with larger mortgages.
“A single 0.25% rate rise could push monthly repayments up by about $94 for someone with a $600,000 mortgage. That’s an extra $1,128 a year — money many households simply don’t have to spare when they’re also being hit with higher grocery costs, insurance premiums and energy bills,” Mr Koch said.
| Loan size | Monthly impact of a 0.25% rate increase | Monthly impact of x2 0.25% rate increases (0.50%) | Monthly impact of x3 0.25% rate increases (0.75%) | Monthly impact of x4 0.25% rate increases (1%) |
| $500,000 | $79 | $158 | $239 | $320 |
| $600,000 | $94 | $190 | $287 | $384 |
| $750,000 | $118 | $237 | $358 | $480 |
| $900,000 | $142 | $285 | $430 | $577 |
| $1,000,000 | $157 | $317 | $478 | $641 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 5.43% that is increased by 0.25% a month. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. | ||||
New data from Compare the Market shows that a quarter of Aussies (25.17% ) surveyed in January listed mortgage or rental costs as their biggest budget pressure over the past 12 months.*
And, amid rates being left on hold or potentially rising in 2026, the research found homeowners would try ease financial pressure by:
- making extra repayments:14.15%
- switching and refinancing to a more competitive variable-rate home loan: 12.19%
- doing nothing and staying with their current home loan lender: 11.99%
- opening an offset account: 10.52%.
“Australians don’t need to panic, but they should be prepared. Reviewing your home loan, understanding your options, and building financial flexibility now could help soften the blow if rates do rise later in 2026,” Mr Koch said.
*Compare the Market survey of 1,017 Australian adults, conducted January 2026.
*LVR <80%
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
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