One of Australia’s four largest domestic banks has taken the unusual step of raising fixed mortgage interest rates for a second time in just three weeks, piling additional financial pressure on home loan borrowers just days ahead of a highly anticipated monetary policy meeting from the Reserve Bank of Australia (RBA).
On Thursday, Westpac Banking Corporation confirmed it would lift its fixed interest rates across all loan terms spanning one to five years by 0.15 percentage points, marking its second upward adjustment in 21 days. Following the change, the bank’s lowest available fixed rate now sits at 6.29% for a two-year fixed home loan. Cumulatively, Westpac has increased its fixed mortgage rates by a total of 45 basis points over the three-week period. Even after the consecutive hikes, analysis from financial comparison platform Canstar confirms Westpac still offers the most competitive fixed rate pricing among Australia’s big four banking institutions.
Industry analysts note this move is far from an isolated adjustment, pointing to a widespread trend of repricing across the Australian lending sector driven by growing expectations of persistently high inflation and additional RBA rate increases. Sally Tindall, Canstar’s director of data insights, explained that most major and minor lenders have been revising their pricing upward repeatedly in recent weeks as concerns mount over a resurgence in Australia’s annual inflation rate. “Our analysis shows more than 90 per cent of lenders have adjusted fixed rates higher since the RBA’s last policy decision, including all four of the major banks. Westpac and the National Australia Bank have both implemented two separate hikes in this window,” Tindall noted.
The scale of the repricing shift is stark: just 19 Australian lenders currently offer at least one fixed home loan product with a rate below 6%, down from 83 lenders offering sub-6% fixed rates at the same time last year. For home borrowers already struggling with soaring borrowing costs, this rapid round of adjustments sends a clear message: the window for locking in a relatively competitive fixed rate is rapidly closing, Tindall added.
Westpac’s rate hikes come as the bank’s economic team forecasts three more official RBA cash rate increases in 2026, starting with a hike at the central bank’s upcoming May policy meeting. Luci Ellis, Westpac’s chief economist, linked the expected monetary policy tightening to ongoing geopolitical instability in the Middle East, specifically the conflict that has disrupted shipping through the Strait of Hormuz — a strategic waterway that carries roughly 20% of global oil trade. Since the outbreak of hostilities in late February 2026, global crude oil prices have nearly doubled, climbing from roughly US$56 per barrel to around US$100 per barrel. For Australian motorists, this translates to an extra 10 cents per litre of fuel for every US$10 per barrel increase in crude prices.
Ellis explained that Westpac’s updated forecast accounts for extended fuel supply disruptions, as the Strait of Hormuz has remained effectively closed for eight weeks, with shipping only gradually returning to normal volumes. She added that the pass-through of higher fuel and energy costs to broader consumer prices in Australia has happened far faster than many economists previously projected. “We believe the RBA will respond to this accelerated pricing behavior by tightening monetary policy more aggressively than it would have if these cost increases had not filtered into broader inflation so quickly,” Ellis said.