Rate shock: Aus big bank signals hike within weeks

Millions of Australian mortgage holders could be hit with higher repayments within weeks, with the nation’s biggest bank warning another interest rate rise is now most likely.

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

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

“We continue to see a February 2026 rate hike as the most likely scenario. Thereafter, we expect the cash rate to remain on hold at 3.85 per cent,” the bank report said.

Any rise would be kryptonite for millions of Aussie families, coming after 13 interest rate hikes since 2022 and landing just as school fees, summer power bills and Christmas credit card debts fall due.

The hit to household budgets would be immediate with a typical $600,000 mortgage repayment jumping by $90 a month on a 0.25-point rise, Canstar analysis found.

A $750,000 loan would increase by $112, while $1 million mortgages would face an extra $150 a month, it said.

CBA head of Australian economics Belinda Allen said the outcome was far from locked in, given “a lot was dependent on the outcome of the Q4 25 CPI data due on January 28”.

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

Canstar said “it is still noticeably outside of the RBA’s target band and a long way from the midpoint of 2.5 per cent”.

Fresh consumer confidence data suggests 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.

But ANZ economist Sophia Angala said “this is the weakest new year’s print in over 15 years”.

She said one spending measure had strengthened – the ‘time to buy a major household item’ subindex which hit its third-highest reading since the beginning of 2025, “and only a little below the recent Black Friday peak”.

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

According to CBA data, the Australian economy added 23,000 jobs in December, while quarterly wage growth held steady at 0.8 per cent.

Key dates to watch:

January 22: Labour force data

January 28: CPI inflation figures

February 3: RBA interest rate decision