RBA interest rates live updates: Reserve Bank boss Bullock says war, petrol pain not reason for hike

Westpac will also pass on the higher rate in full, effective (also) from March 27.

“With overseas conflict impacting inflation and cost of living, we know these are uncertain times for many of our customers,” said Westpac chief executive, consumer, Carolyn McCann.

“We are here to help and if customers are concerned, we urge them to contact us as early as possible so we can talk through the support options available,” Ms McCann said.

Unlike NAB, Westpac said it would also increase the interest rate on its most popular product for savers, which we know will be welcome news for customers who are working towards their financial goals,” Ms McCann said.

March 27 is also the date higher rates will kick in for ANZ.

Group executive Australia retail, Pedro Rodeia, said “we recognise the pressure higher home lending rates can place on household budgets”.

“Customers who might be concerned about their repayments are encouraged to get in touch with us early. Our team is ready to provide support, guidance and access to a range of tools to help customers manage their finances,” he said.

National Australia Bank has followed rival Commonwealth Bank in lifting its variable interest rate in full following today’s decision by the RBA.

The higher rates will take effect on March 27, with its lower variable rate now set at 6.19 per cent.

But the big four bank stayed schtum on what benefit it will deliver for savers.

In the case of an increase to customers’ minimum monthly repayments, the big four banks provide the following, says Canstar:

• CBA: a minimum of 20 days’ notice
• Westpac, NAB and ANZ: a minimum of 30 days’ notice

Exactly when a customer’s repayments will rise will also depend on how long it takes the banks to issue the repayment change letter and where the customer is in their billing cycle. This can take up to two or three months in some cases.

Remember, the rate you pay is negotiable, so get on the phone to your lender and bargain for a better deal.

When it comes to the best deals, Canstar says that once the dust settles on this hike, it estimates:

• 6.01 per cent will be the average owner-occupier variable rate.
• 5.75 per cent will be a competitive owner-occupier variable rate, on offer from an estimated 40+ lenders.
• 5.50 per cent is likely to be one the lowest variable rates.

Commonwealth Bank - Australia’s biggest home loan lender - has been the first mover and says it will hike its variable mortgage rate by 25 basis points from March 27.

Angus Sullivan, the big-four bank’s executive of retail banking, said the changes could put additional pressure on household budgets and influence how people plan and manage their finances.

“That’s why we’re committed to making support simple and accessible,” he said.

“Customers can choose the option that suits them best - whether that’s using the CommBank app, speaking with a lending specialist, or exploring digital tools like our home loan repayment calculator to plan ahead and understand how interest rate changes may affect them.”

Housing prices were already moderating in some parts of the east coast before today’s rate hike, but Perth’s property market remains red hot.

So, what will higher monthly repayments mean for the housing outlook?

Oliver Hume Property Group’s chief Economist, Matt Bell, said he expects new house and land purchasing activity to slow until there is some stabilisation in the outlook for rates.

He said this effect would be bigger in the most rate-sensitive market in the country, Sydney, but would be felt everywhere.

“Those hot markets like Perth, Brisbane and Adelaide will slow faster than previously expected, and any increase in the current soft dwelling price growth in Sydney and Melbourne will be muted,” he said.

“One mitigating factor for the new land market is that the impacts we’ve already seen from the changing rates outlook have been stronger in the more expensive suburbs, with outer greenfield regions holding onto established price gains longer while Inner and Middle rings have paused.

“This will help new house and land markets, especially when the underlying drivers of new housing remain in place.”

Even still, rising rates will give all property markets some pause,” Mr Bell said.

“We’ve just released our forecasts for house price growth for 2026, and those markets where we expect improvement will have to deliver it in the second half of the year.”

Click here to see how much more you’ll pay on your mortgage

The hardest rate-rise cycle in a generation took the official cash rate to 4.35 per cent in November 2023.

It stayed there until December the following year.

Will we return to those levels?

PIMCO head of Australia portfolio management Adam Bowe said the decision to lift rates today is pulling forward future anticipated tightening of monetary policy in response to the recent energy price shock, rather than signalling an elongated hiking cycle.

“If the RBA chooses to tighten policy modestly further to bring inflation down more quickly, we do not think they will need to lift the cash rate beyond the prior peak of 4.35 per cent,” he said.

“The current energy price shock is different to that experienced in 2022 on several dimensions. Most importantly, it is not occurring in conjunction with a significant positive demand shock as was the case when the world was emerging from the pandemic.

“The growth outlook prior to this energy shock was much more balanced, with looser labour markets, lower inflation, and monetary policy that was already on the tighter side of neutral.”

When asked by a reporter about the pressures already facing households, Ms Bullock said she was not going to tell families how to manage their budgets.

She acknowledging this was “tough news” for those with a mortgage, while noting the pain everyone was now feeling at the bowser.

But she said if the board did not work to reduce the demand in the economy, businesses would simply build in the extra costs “so it would be even worse for everyone”.

“I personally cannot tell people how to manage their finances but I do undertsand it’s going to be tough for some people and ... with fuel prices and this additional rise in mortgage rates is going to be hard for some people. I do understand that.

“But it’ll be much worse if inflation gets built into the fibres ... then we will see the costs of everything going up, and that will be a much worse outcome.”

Federal Treasurer Jim Chalmers says the RBA’s decision was “unsurprising”, but would still hit households hard.

“We say to Australians around the country who are hearing about this news of an interest rate increase, who dealing with some of these global pressures at the petrol bowser, that we know that those pressures are real,” he told reporters in Canberra.

“ … we will do what we responsibly can to respond to them.”

He said the Government had been addressing cost-of-living relief, which included tax cuts and cheaper medicines.

He said the Middle East conflict was a significant issue.

“The impacts of what we’re seeing in that part of the world are already substantial, but we don’t know yet how enduring those very substantial economic pressures will be,” he told reporters.

Ms Bullock said there was a “robust” discussion before the board eventaully voted five-to-four to lift rates 25 basis points to 4.1 per cent - back to where they were set in April last year.

She said holding until May would have given the board more time to consider the incoming data on inflation and the labour market and “perhaps” provide more clarity on the conflict in the Middle East.

“But the discussion was very much centred around the timing of a rate increase,” she said.

“All members agreed that another rate increase was needed to address domestic inflationary pressures.”

RBA governor Michele Bullock says there was “slightly” more demand in the economy, even before it made its decision to hike rates.

She acknowledged the oil supply problems caused by the Middle East war and threats of rising energy costs.

“Higher petrol prices will add to inflation, but they’re not the reason for today’s decision,” she said.

“Inflation was already too high, reflecting the fact that demand is outstripping supply. Higher fuel costs will not slow demand on their own to address this.

“If we do not act, these price pressures will spread and the eventual adjustment would be harder.”

Today’s rate hike means a family with a $500,000 mortgage paying a variable rate of 5.42 per cent will need to find an addtional $79 a month.

Add that to February’s increase, that’s another $158 a month.

For a household with the same terms but a $750,000 loan, that’s an extra $118 and $237, respectively.

So, where is the extra dosh coming from?

A recent survey by Compare the Market showed that to make extra repayments, families will have to:

• Dip into savings: 15 per cent
• Spend less on clothing and accessories: 22 per cent
• Reduce spend on eating out and takeaway meals: 21 per cent
• Sacrifice social activities: 19 per cent
• Delay big-ticket purchases: 16 per cent

The comparison site’s economic director, David Koch, said homeowners should prepare for more hikes this year.

“That means knowing your rate, and doing some leg work to make sure you’re not paying more than you need to,” he said.

“More than a third of mortgageholders we surveyed don’t even know their rate, which is far too many. If you’re one of them, you could be missing out on better deals without even knowing it.

“Start a conversation with your lender, because there are small steps you can take right now that could make a big difference if rates rise again.”