Australia’s Big Four banks have begun hiking their term deposit and fixed interest rates as expectations grow that the Reserve Bank of Australia (RBA) will move rates upwards next year. The products are among the first ones banks will shuffle when their rate outlook shifts.

NAB increased various term deposit periods by up to 0.25 per cent this week, following in the footsteps of Commonwealth Bank, Westpac and ANZ who have also lifted rates in recent weeks. They are among 31 banks that have increased at least one rate so far this month, with nine lenders having cut rates.

“In the last two weeks, all four big banks have increased at least one term deposit rate, with ANZ taking the lead, among the majors, with an eight-month rate of 4.25 per cent,” Tindall said.

“Term deposits are one of the first products banks reprice when their rate outlook shifts. The fact the banks began lifting rates early last month suggests they’ve been quietly resetting expectations for weeks.”

The highest rate on Canstar’s database is 4.45 per cent, however, Tindall said this could move higher in the weeks and months ahead, particularly if the RBA starts hiking in the new year.

Fixed interest rates on the rise

Fixed mortgage rates are also on the up, with NAB hiking its rates by up to 0.20 per cent this week to bring its lowest fixed rate to 5.39 per cent for its 1 and 2-year terms.

Westpac hiked its fixed rates on Friday by up to 0.35 per cent, marking the second time it has hiked fixed rates in just over a month. Its lowest rate is now 5.49 per cent for its 1-year term.

It’s not just the big banks hiking rates, with Canstar finding 15 banks had raised at least one fixed rate since the RBA’s December meeting.

CBA, NAB forecasting February rate hike

CBA and NAB are both expecting the RBA will hike rates at its first meeting of 2026 in February.

NAB is forecasting two hikes in February and May, while CBA expects one hike should be enough to get inflation back to target, but there is a risk we could need more.

For an average owner-occupier home loan customer with a $600,000 loan and 25 years remaining, one 25-basis-point hike would increase their minimum monthly repayments by $90 a month.

Two hikes would increase their monthly repayments by $180 in total.

Aussies urged to shop around, look beyond Big Four

For savers and mortgage holders, Tindall said it was worth looking beyond the Big Four banks.

“For savers, the message is positive but clear: don’t stop at your main bank. The big four banks have at least one term deposit rate sitting above 4 per cent — that’s a step forward — but better deals are available for those willing to look beyond the majors,” she told Yahoo Finance.

“Then, there is the tussle between whether you want your money locked up in a term deposit, or in an at-call savings account which typically rises and falls with the RBA tide.

“A term deposit can help keep your nest egg out of the firing line from future rate cuts, but it also puts your cash out of contention for potential hikes.”

For those looking to fix their home loan, Tindall said the difference between opting for ANZ’s lowest 2-year rate versus the lowest on the market translated to $4,773 in interest over the next 24 months.

“That’s not spare change – that’s a whole monthly repayment for many borrowers – just by shopping around,” she said.

Source: www.yahoo.com.au