Australia’s major banks are now aligned in their expectations that the Reserve Bank of Australia will lift the cash rate at its February meeting, following stronger-than-expected inflation data.

Westpac and ANZ have both revised their forecasts to now expect a 25 basis point rate hike next week, joining Commonwealth Bank and NAB. NAB is currently the only major bank forecasting a further rate rise later in May.

What’s Driving the Shift

– The Australian Bureau of Statistics’ latest inflation data showed price pressures remain stubborn:
– Headline inflation in the monthly CPI rose to 3.8%
– Trimmed mean inflation lifted to 3.3% in the monthly series
– Quarterly trimmed mean inflation increased from 3.0% to 3.4%, above the RBA’s previous forecast of 3.2%

The quarterly trimmed mean remains the RBA’s preferred inflation measure, and this higher-than-expected result has significantly reduced the chance of rates staying on hold.

What a Rate Rise Means for Borrowers

If the cash rate rises from 3.60% to 3.85%, repayments on a $600,000 variable home loan with 25 years remaining could increase by around $90 per month, assuming lenders pass on the full rise.

While this is unwelcome news for many households, banks report that a large number of borrowers have built buffers over the past year. NAB and CBA data show most variable-rate customers continued paying above minimum repayments through previous rate rises, leaving many ahead on their loans.

What WA Borrowers Should Consider Now

– With rate volatility back on the agenda, this is a timely moment to review your loan strategy:
– Check whether your current rate is still competitive
– Consider fixed, variable or split loan options
– Review repayment buffers and cash flow comfort
– Explore refinancing options across multiple lenders
– Stress-test your loan against further rate changes

Even in a rising rate environment, opportunities exist to reduce risk, improve structure, and protect household cash flow.

How Loan WA Can Help

Loan WA works with a broad panel of lenders to help WA borrowers navigate changing conditions. Whether you are buying, refinancing or simply reviewing your current loan, our team can assess your options and help you make informed decisions with confidence.

This article provides general information only and does not constitute personal financial or credit advice. Lending criteria and fees apply.