RBA

RBA governor Michele Bullock appears at the Standing Committee on Economics at Parliament House, Canberra. Picture: NewsWire / Martin Ollman

One of Australia’s biggest banks put in a double rate hike just hours after Reserve Bank governor Michele Bullock warned of nightmare triggers for another spike in just days.

Westpac became the 13th bank to hike this month, pushing up owner-occupier fixed home loan rates by as much as 0.45 percentage points – equivalent to around double a typical rate hike.

And its chief economist Dr Lucio Ellis followed up with a huge shift in forecasts, joining NAB to name September for the next hike – and warning of a “follow-up” hike in the weeks following it.

Ms Bullock told the House of Representatives economics committee in Canberra Friday morning that inflation triggers were actively “materialising” across the economy.

With the RBA’s next cash rate decision set for Tuesday September 29, she questioned whether the 75 basis points of rate hikes delivered so far this year would be “sufficient” to get prices under control.

“I recognise that higher interest rates are difficult for Australians with mortgages who are also facing cost-of-living pressures. But reducing inflation is essential,” she said.

Westpac didn’t just hike, it put in doubles. Source: Canstar

Dr Ellis said Friday afternoon “we shift the timing of the next rate hike to September from November”.

“We continue to expect a split vote at the meeting, given the likely differences of view about trend growth in supply capacity and state of the labour market. There is a risk of a follow-up hike, depending on the post-meeting data flow.”

Westpac pushed its four- and five-year fixed terms above 7 per cent Friday while keeping its lowest variable rate at 5.99 per cent. The highest hike was for Westpac’s 5-year fixed rate, which jumped by 0.45 percentage points (from 6.69 per cent to 7.14 per cent).

But it also put in doubles for three other fixed terms – up by 0.40 percentage points (40 basis points) for 2, 3 and 4-year fixed rates.

Canstar analysis shows a single rate hike of 0.25 percentage points sees repayments jump by $91 a month for a $600,000 mortgage, $122 a month for $800,000 and $152/month for $1 million.

With NAB and ANZ having already hiked its fixed rates this month, CBA is now the sole remaining major bank that has not yet moved, but analysts warn it is only a matter of time before it follows suit with 13 lenders having moved already.

Canstar data insights director Sally Tindall warned that panic was starting to set in among lenders.

“What started as a trickle of fixed rate increases has very quickly turned into a pile-on, with three of the big four banks hiking fixed rates in the last 24 hours,” Ms Tindall said.

“RBA Governor Michele Bullock couldn’t have made it more clear in her address (Friday) that their revised trajectory for inflation is heading off course once again … It’s difficult to see how we could walk away with another pause.”

RBA

The RBA’s top team at the Standing Committee on Economics at Parliament House, Canberra. Picture: NewsWire / Martin Ollman

Ms Bullock said while housing prices have softened in key capital cities, structural undersupply means overall housing values remain roughly 50 per cent higher than in early 2020 – leaving first-home buyers stranded on the sidelines.

A toxic mix of global and domestic cost pressures were hitting Aussie households at once, including rising petrol prices caused by the Middle East conflict, the global AI boom, and severe weather events driving up everyday prices.

“Developments since then suggest that although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising,” Ms Bullock told the committee.

“Oil and related prices have increased sharply again and will add directly to inflation … It is important that these effects remain contained and do not become embedded into price and wage-setting decisions. Otherwise, inflation could prove more persistent and require a stronger policy response.