All Four Major Banks Now Expect a Rate Rise This Year
Westpac's forecast flip brings every major bank into alignment on a further RBA cash rate increase before December 2026.
All four majors now tipping further rate pain
For months, borrowers were watching the major banks split over where rates were heading. That debate is over. Westpac has reversed its position, and every one of Australia's Big Four banks is now forecasting at least one more interest rate increase before the end of 2026.
Australian Broker reports that Westpac was the last holdout, having previously called for rates to stay on hold through 2026 before dropping in mid-2027. On Tuesday 8 September, Westpac Group's chief economist Luci Ellis confirmed the shift: "A rate hike in November moves back into the base case."
That single sentence ended months of uncertainty — and puts all four majors squarely in the same corner.
The current official cash rate sits at 4.35%, following three consecutive increases earlier in 2026. Westpac now expects a further 25-basis-point lift in November, taking the cash rate to 4.60%. NAB is the most aggressive, tipping a hike as early as the RBA's 28–29 September meeting. Commonwealth Bank (CBA) and ANZ have both settled on November as the most likely timing, though CBA has described the September meeting as "live."
Why the banks changed their minds
The banks aren't changing course on a whim. The reasoning is grounded in two pieces of data that caught economists off guard: inflation running hotter than expected, and the Australian economy proving more resilient than anticipated.
July's consumer price index showed headline inflation at 3.5% in the 12 months to July — down from 3.8% but still above the RBA's 2–3% target range. More concerning is trimmed mean inflation, which held steady at 3.6%, unchanged from the year to June. Core inflation refuses to fall fast enough.
Ellis also pointed to an unusual source of economic strength: Australia's data centre construction boom. "An unprecedented pipeline of investment in data centres and associated renewable electricity generation and distribution is expected to drive business investment and GDP growth, but also limit the pace of disinflation," she said.
For its part, CBA's head of Australian economics Belinda Allen described the economy as "embarking on a cyclical slowdown," with growth expected to ease to around 1.5% by year-end. Despite that, inflation has proven stubborn enough that the bank still expects one more rise before relief arrives — and CBA does not see rate cuts arriving until 2027.
Futures markets had already moved in this direction. By the first week of September, financial markets were pricing in a 54% probability of a rate hike at the September board meeting — up from 40% in the final week of August.
What this means for your mortgage
The practical impact on borrowers is twofold, and both angles are worth thinking through now rather than after the RBA acts.
First, borrowing capacity will tighten. Every time lenders increase their assessment rates — which follows a cash rate rise — the maximum loan amount a borrower can qualify for drops. Ben Kingsley, founder and managing director of Melbourne-based Empower Wealth Advisory, put it plainly: "What brokers need to be thinking about with their customers is what are they doing to take action before the rate rise? Because ultimately, it's going to impact customers' borrowing capacity."
Second, refinancing options may narrow. Higher serviceability rates don't just affect new buyers — they can trap existing borrowers. Kingsley flagged what he called "mortgage prison": a scenario where higher assessment rates mean a borrower no longer qualifies with a new lender, even if switching would save them money. Borrowers sitting on standard variable rates who have been considering a move should run the numbers before the next board meeting on 28–29 September. Use our refinance savings calculator to estimate how much you could save before rates move again, and compare the cheapest home loans currently on market.
The Westpac-Melbourne Institute Consumer Sentiment Index shows how households are already feeling the strain: it fell 5.2% to 84.4 in September, with 64% of consumers now expecting mortgage rates to rise further. Among households with an existing mortgage, that figure climbs to 73%.
Nathan Smith, founder and director at NSW-based brokerage Birdie Wealth, acknowledged that further hikes would test buyer confidence. "There's already a lack of confidence and uncertainty in our buyers at the moment. I think any further rate rises are only going to further reduce confidence in purchasers' minds and delay their purchasing decisions as they wait to see how this affects the market."
That said, Smith noted a counterview worth keeping in mind: "It's always a good time to consider purchasing properties when other people aren't doing it." Buyers with a longer-term horizon and a solid financial position may find the coming months present real opportunities as competition softens. If you're planning a purchase, use our borrowing power calculator to understand what a further 25-basis-point increase would mean for your maximum loan before you commit to a price point.