Westpac has become the last of the big four banks to forecast a Reserve Bank rate rise at the 29 September meeting, joining CBA, NAB and ANZ. Here's what a unanimous call means for first home buyers a week out from the decision.
For the first time this cycle, Australia's four major banks are reading from the same page on interest rates. Westpac has now joined CBA, NAB and ANZ in forecasting that the Reserve Bank will lift the cash rate at its meeting on 29 September, closing off what had been the last major bank still tipping a hold. With the decision about a week away, first home buyers weighing up a purchase or a pre-approval now have a clearer, if less welcome, picture of where borrowing costs may be heading next.
The cash rate has sat at 4.35% since the Reserve Bank's August meeting. NAB was first to call a September move back in late August, and Westpac was the last holdout, shifting only in the past fortnight after previously expecting a hold. CBA and ANZ have both brought their own calls forward from November to September in recent days, pointing to stronger than expected inflation and activity data.
A few threads have come together at once. Underlying inflation, the measure the Reserve Bank watches most closely, has stayed firmer than officials expected through the September quarter. Rising global oil prices have added a fresh source of pressure on petrol and transport costs, which can flow through to broader inflation figures. On top of that, Reserve Bank governor Michele Bullock and deputy governor Andrew Hauser used a parliamentary hearing in mid-September to signal that current rates are only just back to what they consider a sensible level, language markets read as leaving the door open to another move.
It's worth remembering a bank forecast is not the same as a Reserve Bank decision. The board weighs the full run of data available to it at each meeting, and economists have revised their calls more than once already this year as new figures have landed. A hold in September remains possible even with all four majors now pointing the other way.
A unanimous forecast from the big banks does not guarantee a rate rise, but it is a reasonable prompt to check your own numbers before the decision lands. Lender serviceability assessments already build in a buffer above the advertised rate, so shifting expectations can affect how much a lender may be willing to approve even before the Reserve Bank meets.
Rather than guessing how a possible rate rise would affect you, it may help to test it directly against your own situation before the 29 September decision: