The RBA left the cash rate unchanged at its latest meeting, responding to higher-than-forecast inflation for the year to September. In the wake of this decision, major banks, including the Commonwealth Bank of Australia, have revised their forecasts, with some now expecting that the cycle of rate reductions has ended.
Among the lenders increasing fixed rates is St George, which has lifted some rates by as much as 0.35 percentage points, according to Compare the Market. St George stated that its fixed home loan rates must “remain aligned with current market conditions”.
Westpac has also raised certain fixed rates, citing “the increased cost of fixed rate funding and ensures our fixed home loan rates remain aligned with current market conditions”.
David Koch, economic director at Compare the Market, commented on the implications for borrowers. “This could be an ominous sign for a lot of Australians hoping for an interest rate cut in the first half of next year,” he said. “I reckon there’s a really good argument that maybe this is the bottom of the interest rate cycle.”
He noted that if inflation, as measured by the consumer price index, accelerates, rate hikes could follow. “There could be an option that rates go up next year, because the Reserve Bank is so worried that inflation is going to get out of control,” Koch added.