Westpac hikes fixed rates twice in 3 weeks, 6.29 per cent starting point

Westpac has become the latest of the big four banks to increase fixed rates as households brace for further mortgage pain.

On Thursday, Westpac lifted its fixed rate offering for the second time in three weeks as the bank prepares for further rate hikes.

Thursday’s hike was 0.15 per cent across each of its one, two, three, four and five-year offerings.

As a result, Westpac’s fixed interest rates now start from 6.29 per cent, available on its two-year offering.

Overall, Westpac has lifted interest rates up by 45 basis points in just the last three weeks.

Even with the two interest rate hikes in three weeks, Westpac’s fixed rates remain the cheapest of the major four banks.

Canstar data insights director Sally Tindall says Westpac’s interest rate hike isn’t an isolated event.

“Plenty of banks are heading back to the pricing drawing board, some for the second time in a matter of weeks, as a result of growing concern Australia’s inflation rate is about to spike once again,” she said.

“Our analysis shows more than 90 per cent of lenders have moved fixed rates since the last RBA decision, including all four big banks, with both Westpac and NAB having two stabs at it in this time.”

According to Canstar, just 19 lenders are offering at least one fixed rate under 6 per cent.

This time last year there were 83.

“For borrowers, this swift repricing is a clear signal – opportunities to lock in a more competitive fixed rate are slipping away,” Ms Tindall said.

Interest rates set to rise

Westpac is lifting its fixed rate offerings to customers as it predicts further interest rate pain for households.

In a previously released forecast, Westpac predicted there would be three more interest rate hikes in 2026, with the central bank set to lift rates in May.

Westpac chief economist Luci Ellis says the Middle East conflict is flowing through to fuel prices, which will eventually lift the broader inflation rate.

“We now expect the RBA to hike in June and August as well as May,” Ms Ellis previously said.

Australia’s inflation rate has re-accelerated lately as the US/Israel and Iran war, which started at the end of February, led to the blockage of a critical waterway known as the Strait of Hormuz.

About 20 per cent of the world’s oil flowed through this region before the conflict.

Since the war, the price of oil has nearly doubled from $US56 ($A80) a barrel to about $US100 ($A143) a barrel.

For every $10 increase in the price of oil, Australians pay an extra 10 cents at the fuel pump.

Ms Ellis said the change reflected assumptions that fuel supply disruptions would last longer than previously thought, with the Strait of Hormuz effectively closed for about eight weeks and shipping traffic recovering gradually.

“It also reflects the surprisingly rapid pass-through of higher fuel and other oil‑derived product prices into other prices in Australia,” she said. “We believe the RBA will respond to this pricing behaviour by tightening monetary policy by more than would have been needed absent that pass‑through.”