Here’s a bombshell for homeowners and borrowers: Australia’s Big Four banks—Westpac, Commonwealth Bank of Australia, National Australia Bank, and ANZ—have all passed on the Reserve Bank of Australia’s (RBA) latest rate hike, leaving many households bracing for higher mortgage repayments. But here’s where it gets controversial: while borrowers are feeling the pinch, savers are left in the dark, with no word from the banks on whether savings rates will rise. Is this fair, or are loyal savers being left behind?**
Westpac kicked things off by announcing a 0.25 per cent increase in variable home loan rates, effective February 17, with the other three banks swiftly following suit, implementing their changes from February 13. This move comes as the RBA grapples with stubborn inflation, which isn’t expected to return to the target 2-3 per cent range until June 2027—a timeline that’s raising eyebrows among economists and households alike.
And this is the part most people miss: RBA Governor Michele Bullock has admitted that the path forward isn’t as clear-cut as it was during the post-COVID tightening cycle. Back then, rates were starting from a record low of 0.1 per cent, making aggressive hikes a no-brainer. Now, the central bank is navigating a more uncertain landscape, with Bullock acknowledging, ‘This isn’t as clear.’ So, what does this mean for borrowers? CBA’s economists predict another hike in May, potentially pushing the cash rate to 4.1 per cent, as there’s little evidence today’s increase will curb demand anytime soon.
Belinda Allen, CBA’s head of Australian economics, summed it up bluntly: ‘Inflation is simply too high for the RBA at this stage, and the central bank has signaled a stronger resolve to bring it back within target.’ Meanwhile, NAB chief economist Sally Auld doubts this will be a ‘one-and-done’ scenario, hinting at further hikes on the horizon. For homeowners, financial comparison site Canstar warns this could be just the beginning, urging households to prepare for more rate increases.
Here’s the kicker: While borrowers face higher costs, savers are being kept in the dark. As Canstar’s Sally Tindall pointed out, ‘None of the big four banks have said anything about savings rates – creating an unfortunate waiting game that keeps loyal savers in the dark.’ Sure, rising cash rates can benefit savers, but banks often cherry-pick which rates to increase, leaving some accounts untouched. Is this a fair system, or are savers getting the short end of the stick?
Investors are already betting on a follow-up hike in May, with markets pricing in a 75 per cent chance. Globally, the RBA stands alongside the Bank of Japan as one of the few developed-world central banks tightening policy, while the US, UK, and Canada are still priced for rate cuts. The Australian dollar surged 0.9 per cent to $US0.7002, and three-year government bond yields jumped 8 basis points to 4.3 per cent, reflecting the market’s jittery response.
The RBA’s cautious approach to rate hikes—aimed at preserving labor market gains—hasn’t gone without criticism. Last year’s three rate cuts allowed inflation to creep back up, forcing a hawkish pivot in late 2025 and sparking market bets on an earlier-than-expected tightening cycle. But here’s the question: Did the RBA’s focus on employment come at the expense of inflation control? And what does this mean for the average Australian’s wallet?
As the dust settles on this latest rate hike, one thing is clear: the financial landscape is shifting, and both borrowers and savers need to stay alert. What’s your take? Are the banks doing enough for savers, or is it time for a rethink? Let us know in the comments below.
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Reported with Reuters
