One-year fix creeps towards 7% as market hedges bets on cash rate rise next week
Commonwealth Bank (CBA) has increased its one-year fixed home loan rate just a week before the Reserve Bank of Australia (RBA) is widely expected to lift the official cash rate once again.
CBA’s one-year fix spiked by 30 basis points – from 6.59% to 6.89% on a principal and interest loan, bringing it ever closer to the 7% mark. It adds an extra $90 a month on a $450,000, 30-year mortgage.
While only a niche product, the repricing indicates CBA is expecting a short-term lift in funding costs.
It comes as all four major banks – CBA, Westpac, NAB and ANZ – now forecast the RBA will raise the cash rate by 25 basis points to 4.6% at its board meeting on Tuesday, 29 September, which would take mortgage holders to the highest cash rate since 2011.
CBA’s standard variable rate remains at 6.34%.
CBA economists turn more hawkish
CBA and ANZ brought forward their previous November calls on Monday, a fortnight after all five major forecasters abandoned an earlier "rate hikes are done" narrative within days of the July inflation print.
Belinda Allen, head of Australian economics at CBA, confirmed the switch, pointing to the tone of recent RBA communications and market pricing to explain the change.
Allen said the risk sits with the need to tighten monetary policy beyond September, though she noted it is not an easy decision to push policy further into restrictive territory.
Bullock's testimony seals the case
The trigger for the shift was RBA governor Michele Bullock's appearance before the House of Representatives Standing Committee on Economics last week, alongside hawkish remarks from deputy governor Andrew Hauser and assistant governor Sarah Hunter.
Bullock told the committee: "The bottom line is that we need to get inflation back down because if we don't, that is a worse outcome across the board."
Allen said the market had expected a more balanced tone from the Governor, "but instead, the Governor noted 'some of these upside risks to inflation appear to be materialising' and commentary around inflation remained hawkish”.
If delivered as expected, the September move would be the fourth cash rate increase of 2026, following on from NAB and ANZ raising their own fixed rates last week.
CBA still expects the central bank to resume cutting in 2027, though the timing of that easing cycle has been pushed back.
