Which big banks have been right about RBA rate hikes?

Collage of a woman shining a torch into a dark crack in a blue wall, like a big bank predicting rate hikes.

Which Big Four Banks – CommBank, Westpac, NAB, or ANZ – have correctly called cash rate movements over the past year? And what could this tell us about rising interest rates in 2023?

With ten Reserve Bank rate hikes under our belts, let’s take stock.

The path of cash rate hikes in 2022 - 2023

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Here we stand. This time last year, a 3.60% cash rate would’ve been unthinkable. Aside from the Reserve Bank of Australia maintaining a stance that rates wouldn’t lift until 2024, inflation had only just started to take off. ‘Cost of living’ wasn’t a buzzy term. 

Yet when inflation soared well above the 2 - 3% target band set by the RBA, Australia’s monetary policy needed an adjustment. Thus, the RBA deployed its primary tool to level out the economy: cash rate movements.

The first rate rise in May 2022 clocked in at 25 basis points and signalled the end of a historically low era. The rhetoric at the time was that pandemic economic stimulus measures (i.e. a 0.10% cash rate) were no longer needed, as the Australian economy had proven remarkably resilient. RBA governor Philip Lowe stressed that any rate rises were simply ‘returning things to normal’. 

However, as inflation skyrocketed and the cost of living crushed Aussie budgets, it soon became apparent stronger intervention was needed. The RBA followed up its first 25 bp move with four Herculean 50 bp jumps from June to September – taking everyone by surprise. Such large moves were highly unusual for the central bank and indicated a strong, restrictive signal.

In October, when the effects of rate hikes had caught up with most mortgage repayments, the RBA pivoted to a more conservative stance, delivering a series of 25 bp hikes from October 2022 to March 2023 (except January, when the central bank doesn’t meet). 

This took the cash rate from ‘neutral’ to ‘contractionary’ territory. Rate hikes were no longer about returning us to baseline: they were meant to rein us in.

As a result, mortgage stress has mounted; borrowers report having to dig into savings to afford the extra interest on their variable home loans. Even renters haven’t been spared, as CoreLogic reports rents shot up 10.2% in 2022 – thanks partly to landlords foisting interest increases on tenants.

Philip Lowe has reiterated in multiple statements that inflation is a more dangerous enemy than ballooning mortgage costs, arguing that inflation worsens economic inequality and makes it harder for ordinary people* to get by. 

Despite this, growing calls for a halt to hikes have become harder to ignore. New Mozo research found that 1 in 5 borrowers already couldn’t afford another rate rise in 2023, of which there have been two. 

*Lowe earned over $1 million in remuneration for his work as RBA governor in 2022. The rest of the nine-member RBA board in charge of cash rate decisions is staffed by millionaires, business leaders, PhDs, and titans of industry. According to the RBA, the average Australian earns $69,000 a year.

Big bank cash rate predictions: who was right? CBA, ANZ, NAB, and Westpac

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Looking back across our nine prediction articles, it’s clear that not every call made by a big bank has been entirely accurate. However, they have been a relatively reliable bellwether for the overall direction of interest rates. 

Firstly, the big banks have continually revised how high they think rates will go. Early calls from Westpac back in June 2022 put the terminal cash rate at 2.60% in early 2023. Now, Westpac thinks it’ll be 4.10% in May 2023. 

CBA had even warned us as recently as February that a cash rate above 3.35% could induce a per capita recession. Now, the big bank reckons the final rate will be 3.85% in April. 

Secondly, for individual rate movements (either 25 or 50 bp), the big four banks have been split into two camps. CBA and NAB have typically been more dovish, usually opting for 25 bp predictions made at a gradual pace, while Westpac and ANZ have pushed for hawkish and aggressive hikes, advocating for a higher final rate and 50 bp super-shocks. 

Here’s a breakdown of the big bank predictions from the last six RBA decisions, compared to what the RBA actually decided.

How often were the big four right about the RBA? Six-month snapshot

Sep 2022
Oct 2022Nov 2022Dec 2022Feb 2023Mar 2023
CBA
NAB
ANZ
Westpac
RBA move (bp)502525252525

For the last three RBA meetings, all four big banks have correctly called it. Only CBA and NAB have gotten it right for the last six meetings entirely. ANZ missed in October, while Westpac overshot its guesses twice (forecasting 50 bp moves instead of 25 bp ones). 

However, it should also be noted that Westpac was one of the largest proponents of the first massive 50 bp hike in June – though at the time, it predicted the RBA would only move 40 bp. 

For posterity (and nostalgia), here’s a compilation of all our prediction articles for this tightening cycle so far. 

Why big bank attitudes to RBA rate hikes matter

Collage of a woman sitting atop overlapping circles.

Besides employing some of Australia’s leading economists, CBA, Westpac, NAB, and ANZ combined make up the vast majority of Australia’s banking services, catering to an estimated 80% of Aussies.

Each big bank also makes up the bulk of all home loan lending in Australia, either directly or by financing smaller lenders. The majority of home loans in Australia use variable interest rates, making them sensitive to the cash rate – and between May 2022 and February 2023, each big bank passed along the RBA rate hike to borrowers in full. 

Fortunately, while they may be thought leaders, the big banks are hardly rate leaders in the Mozo database. You can compare the big four with smaller lenders with our rate check hub, or browse low-interest home loans below if you’re seeking to refinance

Compare low interest rate home loans below.

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Last updated 30 October 2024 Important disclosures and comparison rate warning*

Home loan comparisons on Mozo

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
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    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

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    5.99 % p.a.
    Variable
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    5.90 % p.a.
    Initial monthly repayment
    $2,995
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    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

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    Fixed 2 years
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $2,852
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    Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).

  • Fixed Home Loan

    • Owner Occupier
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    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $2,852
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    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Fixed Express Home Loan

    • Owner Occupier
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    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
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    Initial monthly repayment
    $2,852
    Go to site

    Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).

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    Get repayment certainty with HSBC’s low 2 Year Fixed Rate Home Loan. Make up to $10,000 of extra repayments a year. The option to split your home loan between fixed and variable. Plus, score $3,288 cashback when you refinance an existing home loan of $250,000. Must apply by 28 February 2023 and settle by 30 April 2023.

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    Variable
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    Competitive variable rate on up to a 30 year loan term. No application fees to pay. Unlimited additional repayments. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

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    5.90 % p.a.
    Initial monthly repayment
    $2,995
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    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

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    $2,995

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    Get online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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