Sydney, February 4, 2026, 17:00 (AEDT) — After-hours.
- Westpac shares closed up 1.45% at A$39.89, tracking a broad lift in bank stocks.
- The move follows the RBA’s 25-basis-point rate hike to 3.85% and lenders’ quick pass-through to variable mortgages.
- Focus shifts to Feb. 17 mortgage repricing and the next RBA policy meeting in mid-March.
Westpac shares ended Wednesday up 1.45% at A$39.89, market data showed. The stock ranged between A$38.36 and A$40.05; Commonwealth Bank of Australia rose 2.6%, National Australia Bank gained 2.1% and ANZ added 0.8%.
Rate turns drive bank share prices. Higher policy rates can fatten net interest margin — the gap between what a bank earns on loans and pays on deposits and wholesale funding — but they can also squeeze borrowers and slow credit growth.
Traders now have a fresh question to price: whether Wednesday’s lift was a one-off reset, or the start of a tighter stretch that keeps mortgage rates edging higher into the next few months. For Westpac, the speed of pass-through, and whether deposit competition eats the gain, will matter more than the headline cash rate.
The RBA raised the cash rate target by 25 basis points, or a quarter of a percentage point, to 3.85% on Tuesday, saying inflation had “picked up materially” in the second half of 2025 and private demand had strengthened more than expected. It also said activity and prices in the housing market were continuing to pick up. Reserve Bank of Australia
Australia’s major lenders moved quickly after the central bank’s first rate hike in two years. “We’re focused on providing support and helping them stay in control of their finances,” Angus Sullivan said. ABC News
Westpac said it will lift variable home loan rates by 0.25% a year from Feb. 17 for new and existing customers. “We understand that an interest rate increase may add pressure to household budgets,” Carolyn McCann said, adding: “For those who need support, we are ready to help.” Westpac
Westpac’s chief economist Luci Ellis said the central bank had set “a low bar” for further hikes, and she expects the next move is more likely in May than March. Any sign the cash rate is headed higher could support bank earnings, but it also risks trimming demand for new loans. Westpaciq
Investors will also watch what happens on the funding side. Banks that chase term deposits too aggressively can give back the benefit of higher lending rates, especially if wholesale markets stay jumpy.
But the upside from repricing can fade if arrears climb. A sharper-than-expected hit to household budgets could lift defaults and force banks to set aside more provisions, or draw political heat if borrowers feel they are paying first.
For Westpac, the next checkpoint is Feb. 17, when the new variable mortgage rates take effect, and whether rivals tweak pricing again. The broader market will be watching the RBA’s next Monetary Policy Board meeting on March 16–17, with the decision due on the second day.
