Australia’s Big Four banks are raising their interest rates, signaling that a shift in the Reserve Bank of Australia’s (RBA) approach could be imminent. With expectations growing that the RBA will hike rates early next year, CBA, Westpac, NAB, and ANZ are making their moves, adjusting term deposit and fixed mortgage rates in anticipation of this.
A Shift in Bank Rates: What’s Happening?
Over the last few weeks, all four major banks have begun raising their term deposit and fixed interest rates. These changes are some of the first signals that the banks expect an increase in the official cash rate from the RBA in early 2026. For example, NAB has increased its term deposit rates by up to 0.25%, following in the footsteps of CBA, Westpac, and ANZ. While some lenders have lowered rates this month, 31 banks have raised at least one of their rates.
According to Sally Tindall, Canstar’s insights director, these changes are a result of shifting cash rate forecasts, with many expecting a rate hike from the RBA as soon as February. “Term deposits are one of the first products banks reprice when their rate outlook shifts,” Tindall explained to Yahoo Finance. This suggests that the banks have been quietly preparing for a rate increase for some time now.
The Impact on Consumers: Higher Rates, Higher Returns?
While the rate hikes are mostly on term deposits and fixed mortgages, these changes can affect everyday Australians. If you’re someone with a term deposit, you might see slightly better returns, as ANZ has recently offered an eight-month term deposit at a rate of 4.25%. Commonwealth Bank’s highest term deposit rate is now 4.20% for two years, and Westpac and NAB are offering 4.10% for one-year terms.
On the mortgage side, fixed rates are also on the rise. NAB has increased its fixed rates by up to 0.20% this week, making its lowest fixed rate 5.39% for a one or two-year term. Westpac, not to be left behind, also hiked its rates by up to 0.35% for the second time in just over a month. This raises its lowest rate to 5.49% for a one-year fixed mortgage.
Why Are Rates Going Up?
The reason behind these hikes is tied to predictions that the RBA will increase the official cash rate early next year, with many expecting it at the February meeting. Both CBA and NAB are aligning their strategies with these predictions, and their rate hikes reflect that. But it’s not just about the Big Four; other smaller banks are also adjusting their rates, with 15 banks raising at least one fixed rate since the RBA’s December meeting.
This all ties back to the larger economic picture, where inflation and rising costs have pushed the RBA to consider increasing interest rates again.
What This Means for You
So, what does this mean for Australians with savings, investments, or mortgages? If you have term deposits or fixed-rate mortgages, now might be a good time to evaluate your options. Rates are on the rise, and while you might get better returns on savings products, mortgage holders could face higher repayments if fixed rates continue to climb.
The future is uncertain, but one thing’s for sure: the financial landscape in Australia is changing, and the moves from the Big Four banks are just the beginning.
Will the RBA Follow Through?
As we move closer to 2026, all eyes are on the RBA and whether it will raise the official cash rate in February. The rate hikes from the banks are clearly linked to these predictions. Whether or not the RBA follows through on these expectations could have a major impact on both the banking sector and everyday Australians.
In the meantime, Australians with mortgages or savings should keep a close eye on further developments. If the RBA does move rates up as expected, we could see even more shifts in bank products. The question now is: how much higher will rates go, and will they continue to climb as we move further into 2026?
