Big banks expected to follow Macquarie and sting home owners with rate rise

Australia’s big four banks are expected to follow Macquarie and pass on the Reserve Bank’s quarter-percentage-point rate rise to home owners, adding $122 in monthly repayments on a standard $800,000 mortgage, and increasing borrowers’ pain following three rate rises earlier this year.

While the rise to 4.6 per cent will bite for mortgage holders, federal data shows the nation’s total offset account balances are still near record highs, and overdue home loan repayment rates are still very low.

Spending and labour market resilience has played into the Reserve Bank’s thinking on rates to date and, some analysts expect, could support the case for further rate rises that could exacerbate early signs of stress in parts of the economy.

Head of Australian bank research at UBS, John Storey, said it was all but inevitable that the big banks would pass on the rate rise. “I think it’s a fait accompli, unfortunately,” Storey said.

Macquarie Bank, the nation’s fifth-largest home lender, said on Tuesday it will pass on the central bank’s 25-basis-point increase in full, with the change taking effect from October 15. Savers with deposits in many of the bank’s accounts will get the same increase.

“For any customers concerned about making their home loan repayments, we encourage them to get in touch, as financial assistance may be available,” said Macquarie personal banking chief Ben Perham.

Data released by the Australian Prudential Regulation Authority on September 17 shows that for the quarter ending in June this year, Australian offset balances stood at a total of $340 billion. That is up about $39 billion on the same period a year before, but down from the staggering $349 billion recorded in the March quarter of 2026.

Those accounts help cushion the consequences of interest rises by reducing the portion of an outstanding loan that is carrying interest and giving households a financial pool to draw on for repayments if needed.

Despite recent rate rises, data from the banks isn’t showing a large jump in people struggling with their mortgages. ANZ figures from August show, as of June 30, it had a 0.86 per cent exposure to home loans that were more than 90 days past due in its Australian portfolio, up three basis points compared with March.

“We continue to watch the external environment closely across our network,” chief executive Nuno Matos said at the time. “Our balance sheet and capital position remain strong, and we are staying close to our customers should they need support.”

Storey, the UBS analyst, said that coupled with falling house prices, the offset data showed “there’s a bit of strain, with consumers that aren’t as cashed up as they used to be”. But he cautioned that the consequences were uneven, depending on factors such as when people bought their homes.

Older Australians who owned their homes outright could benefit from rising interest rates on their savings accounts, Storey noted. Overall, he said, banks and mortgage holders were protected by the fact that many had large equity in their homes and were ahead on their payments, but flagged issues in the private credit industry and the ongoing conflict in the Middle East as risks.

Cassandra Goldie, chief executive of the Australian Council of Social Services, said while the organisation was concerned about the consequences of rate rises for mortgage holders, renters deserved protection.

“We’re very worried about renters because if we see a further increase there, people on low and modest incomes are going to be facing homelessness at this point,” Goldie said on ABC radio.

The big four banks were contacted for comment.

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