Rate shock: signals from major bank Aus to rise within weeks – realestate.com.au

Millions of Australian mortgage holders could face higher repayments within weeks, with the country’s largest bank warning another rate hike is now highly likely.

The Commonwealth Bank dropped the bombshell on its December 2025 Wage and Labor Insights report on Tuesday, maintaining its forecast that the Reserve Bank would raise interest rates at its February 3 meeting despite a modest easing in wage growth.

CBA head of Australian economics Belinda Allen.

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CBA data shows annual wage growth fell to 3.1 percent in November, down from 3.2 percent a month earlier – but the slowdown was not enough to change the bank’s outlook.

“We continue to see a rate hike in February 2026 as the most likely scenario. After that, we expect the cash rate to remain unchanged at 3.85 percent,” the bank report said.

Any increase would be kryptonite for millions of Australian families, after 13 rate hikes since 2022 and just as school fees, summer energy bills and Christmas credit card debt come due.

The hit to household budgets would be immediate, with a typical $600,000 mortgage payment increasing by $90 a month for a rise of 0.25 points, Canstar’s analysis shows.

A $750,000 loan would increase by $112, while $1 million mortgages would have to pay an extra $150 per month, the report said.

Results of the consumer price index per month, CPI % and trimmed average %. Source: Canstar.

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CBA head of Australian economics Belinda Allen said the outcome was far from certain as “much depended on the outcome of the fourth quarter 2025 CPI data, which was due on January 28”.

Inflation data for November showed some cooling, with headline inflation falling to 3.4 percent from 3.8 percent in October – but analysts warned it remains well above the Reserve Bank’s target.

Canstar said: “It is still noticeably outside the RBA’s target market and a long way from the 2.5 per cent midpoint”.

New consumer confidence data shows households are still optimistic, with the ANZ-Roy Morgan Australian Consumer Confidence index rising three points to 84.5 in the week to January 11.

Four-week average of consumer confidence per housing cohort. Source: ANZ

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But ANZ economist Sophia Angala said: “This is the weakest New Year’s print in more than 15 years.”

She said one spending measure had strengthened: the ‘time to buy a major household item’ sub-index, which reached its third highest value since early 2025, “and only slightly below the recent Black Friday peak”.

Ms Angala said weekly inflation expectations fell by 0.2 percentage points last week.

According to CBA data, the Australian economy added 23,000 jobs in December, while quarterly wage growth remained stable at 0.8 percent.

Important dates to view:

January 22: Labor force data

January 28: CPI inflation figures

February 3: RBA interest rate decision