Rate Hike in November: What Borrowers Need to Know Now
Westpac's pivot makes it official — all four major banks now forecast the RBA will lift the cash rate to 4.6% in November.
The consensus is in. Westpac's decision to shift its base case to a November rate hike makes it the last of Australia's big four banks to fall into line, with all four now forecasting the Reserve Bank of Australia will lift the official cash rate by 25 basis points to 4.6 per cent at its November meeting.
For households already carrying a mortgage through the RBA's three rate increases earlier this year, this is not welcome news. The cash rate has been sitting at 4.35 per cent since the most recent hike, and borrowers who were hoping the next move would be downward now face a longer wait.
Why the Big Banks Have Changed Course
Westpac chief economist Luci Ellis spelled out the reasoning plainly: "The likelihood of an additional rate hike has risen enough to make a November rate hike (+25bp to 4.6%) the base case again."
She pointed to two main drivers. First, the household sector is proving more resilient than expected — previous rate rises have not cooled demand as much as hoped. Second, there is a "larger-than-expected impetus from the spillovers from the data centre boom," with unprecedented investment in data centres and associated renewable energy infrastructure driving business investment and keeping inflation higher for longer.
Crucially, weakness in the housing market is not enough to offset these forces. As Ellis noted, the drag from falling house prices "is more than offset by the wider boost coming from a globally-driven surge in tech-related spending." Despite the updated near-term outlook, Westpac has not changed its longer-term forecast: the bank still projects three cuts of 0.25 percentage points each, beginning in August 2027.
These forecasts are consistent with the RBA's own public signals. RBA Deputy Governor Andrew Hauser recently acknowledged that inflation remains the central bank's "one big problem," saying bluntly: "People are furious about inflation." He confirmed the bank could raise rates sharply if it chose to, but is not yet prepared to abandon its focus on protecting employment gains. "We raised interest rates earlier than other central banks and ... we stand ready to do so again if we need to," Hauser said.
The RBA board's next meeting is at the end of September. Importantly, the latest monthly CPI inflation figures are not due to be published until September 30 — a day *after* that meeting — meaning the board will make its call in partial data darkness. That timing makes a November move significantly more likely than September action. Headline inflation stands at 3.5 per cent for the year to July, still well above the RBA's 2–3 per cent target band. The RBA's own projections have inflation returning to target by early 2028, a timeline that underscores how far the job remains from done.
Consumer Confidence Has Tumbled
The prospect of another rate hike is already doing damage to household confidence. The Westpac–Melbourne Institute consumer sentiment index fell 5.2 per cent in September to 84.4 points, down from 88.9 in August — what Westpac's head of Australian macro-forecasting Matthew Hassan described as a retreat toward "deeply pessimistic levels seen earlier in the year."
Petrol prices are adding to the pressure. Pump prices have climbed back above $2 per litre for the first time since April, driven by higher global energy prices and the end of the temporary halving of fuel excise. Brent crude was trading above $US98 per barrel on 8 September.
Nearly two-thirds of consumers now expect mortgage rates to rise — and unease about the job market is beginning to spread, particularly in construction and hospitality. Business confidence is also deteriorating sharply. NAB's monthly business survey for August showed confidence falling 2 points to -8 index points, sitting 13 points below its long-run average. Business conditions dropped 5 points to -1 index points, the first time in six years they have been in negative territory, with a 10-point fall in profitability at the heart of the decline.
"Overall, the key signals from this month's survey are slowing growth amid a backdrop of persistence in cost and price pressures," NAB noted. That combination of cooling growth and persistent inflation is precisely the environment in which the RBA must decide whether it has done enough — or whether more is needed.
What to Do Before November
If you are on a variable rate mortgage, a further 25-basis-point hike will flow through automatically once the RBA acts. Here is what to consider now, while you still have time.
**Check what you are paying.** Lenders are competing hard for new borrowers, and the gap between the market's sharpest rates and the average back-book rate has widened significantly over the past 12 months. Reviewing the cheapest home loans available today could put you in a better position before any November increase lands.
**Run the numbers on your repayments.** A 25-basis-point rise on a $700,000 loan adds roughly $110 per month on a standard 30-year principal-and-interest mortgage. Use a repayment calculator to model your own exposure so you are not caught off guard.
**Consider refinancing.** Borrowers who have not revisited their loan in the past year or more may be sitting on a rate that is no longer competitive. Switching lenders or products can deliver savings regardless of where the RBA moves next. Explore refinancing options and model the benefit with a refinance savings calculator before making any decision.
**Think carefully before fixing.** Fixed-rate products have already moved to price in some of this expectation, so locking in now may not offer the discount it once did. Whether a fixed rate makes sense depends on your specific loan size, income, and plans — speak with a qualified mortgage broker before committing.
The data is clear: inflation is still too high, household spending is holding up better than expected, and the global environment — oil prices, the AI investment boom, geopolitical uncertainty — is not cooperating. The RBA has said publicly it stands ready to act, and with all four major banks now forecasting one more hike before the year is out, borrowers should be preparing rather than waiting.