Who rate rises helped

The mechanism of the bank windfall from the 2022-23 rate cycle is not complicated. A bank earns money on the difference between what it pays for deposits and what it charges for loans. This difference is the net interest margin. In the three 2026 rises to May, banks raised their advertised variable mortgage rates in the same month ²⁰. The rate they pay on standard transaction accounts barely moves: advertised transaction accounts paid 0.00 per cent in every month from November 2025 to August 2026, through the first three rises ²³. What households were paid on all their deposits rose about as much as what owner-occupiers were charged on outstanding variable loans ²¹²². In 2022-23 the gap widened at first, and industry net interest income rose about 16 per cent in the first year of the rises ¹⁷.

Correction, 29 September 2026. The words ‘fully’ (in the paragraph above, now removed), ‘quickly and completely’ and ‘slowly and incompletely’ (in the subtitle, now amended) overstated the 2022-23 record. The Reserve Bank measured that the average outstanding variable mortgage rate rose by around 70 basis points less than the cash rate between May 2022 and September 2023 (new variable rates about 40 basis points less), while the average rate on total deposits excluding offset accounts rose 325 basis points, around 75 per cent of the rise in the cash rate: neither borrowers nor savers received the full 425 basis points ¹⁶. The gap did widen at first. On THE RORT’s calculation from APRA data, the banking system’s net interest income relative to loans rose from 2.12 per cent in June 2022 to 2.35 per cent in June 2023, and industry net interest income rose about 16 per cent in the first year of the rises, before competition compressed margins from mid-2023 (2.17 per cent in June 2026) ¹⁷. Over the whole cycle, the major banks’ spread between lending rates and funding costs fell 60 basis points to around 190 basis points ¹⁶. The subtitle’s closing sentences ‘The gap between the two is profit’ and ‘The RBA’s rate cycle was a transfer from borrowers to banks’ were also removed; above, ‘typically within days’, ‘much more slowly, and much less completely’ and ‘The gap widens. Profit increases.’ were removed or replaced. The subtitle, the paragraph above, the pull quote and the image have been amended. The same overstatements were removed from the body: ‘(fast for borrowers, slow for depositors)’ in the section on the structural reason, and ‘The beneficiary is primarily the banking sector’ and ‘transferred purchasing power from borrowers ... to banks, who widened their margins’ in the closing section, which now give the measured record. In the section on the Senate hearings, the sentence that the answers ‘confirmed the asymmetry’ was replaced, because THE RORT has not re-checked the record of those hearings for this update and the measured 2022-23 record is above.

In a December 2023 analysis of the 2022-23 cycle, UNSW associate professor Humphery-Jenner described the dynamic plainly: banks are notorious for passing on RBA rate hikes to borrowers but not to depositors ¹. That is a description of that cycle, not a measurement of 2026; the 2026 rate comparison is in the first update below.

APRA measures the gap for the whole banking system as net interest income over gross loans. It stood at 2.12 per cent in June 2022, 2.35 per cent in June 2023, 2.25 per cent in June 2024, 2.20 per cent in June 2025 and 2.17 per cent in June 2026 (THE RORT’s calculation from APRA data) ¹⁷. It measures the system, not any one bank, and it is not profit.

Profit is a separate measure. APRA reports bank (ADI) profit after tax of $42.5 billion in the year to June 2026, up 7.5 per cent; in the March and June 2026 quarters, the two that contained the rises, profit was $20.33 billion against $20.06 billion a year earlier, up 1.4 per cent (THE RORT’s sum of APRA’s quarterly figures) ¹⁷.

Correction, 29 September 2026. This article said the four major banks reported a combined record profit of approximately A$32.5 billion in FY23, up 12.4 per cent; gave each bank’s FY23 profit; called Commonwealth Bank’s FY23 profit a record; gave the four banks’ net interest income as A$74.9 billion, up 13.8 per cent, with a 9 basis point margin gain; and said 1.5 million mortgage holders were at risk of stress in the same year, adding that the two numbers were ‘linked through the same rate rises’. THE RORT has no primary source for those figures, that description or that link, and they have been removed from the subtitle, caption, opening section, fact box, key facts, pull quote and image. They are replaced with APRA’s net interest income and profit figures ¹⁷. The sentence that profit increased in 2022-23 now says net interest income rose. The section heading and the closing section were reworded to match.

01The margin: what the gap between loan and deposit rates did

Net interest income is the aggregate difference between what banks earn on loans and pay on deposits and funding. Across the banking system it rose about 16 per cent, from $81.3 billion to $94.4 billion, in the first year of the 2022-23 rises, and the margin widened before competition compressed it from mid-2023 (THE RORT’s calculation from APRA data) ¹⁷. Over the whole cycle the Reserve Bank measured the major banks’ spread between lending rates and funding costs falling 60 basis points to around 190 basis points ¹⁶.

UNSW’s December 2023 analysis reported that Westpac’s NIM rose 2 basis points to 1.95 per cent ¹⁵. As that analysis noted: while two basis points might not sound like much, when the bank handles billions of dollars, it is significant. This is UNSW’s figure; THE RORT has not checked it against Westpac’s filing.

In results for the first half of FY25 (CBA’s half to December 2024, the others’ to March 2025, mostly before the first 2025 cut, effective 19 February 2025), the four major banks’ combined profit was about A$15.5 billion (THE RORT’s calculation from KPMG’s figure for the following half, $15.2 billion, down 2.1 per cent on it) ²⁸. The temporary NIM windfall from the tightening cycle has partially faded. But bank earnings remained strong.

Update, 29 September 2026. The cutting phase reversed. After three cuts in 2025 to 3.60 per cent, the Reserve Bank raised the cash rate four times in 2026, to 4.60 per cent from 30 September ¹⁸¹⁹. In the three rises to May, every advertised bank variable housing rate in the RBA’s indicator table rose the full 0.75 points in the months of the rises ²⁰. What owner-occupiers were actually charged on outstanding variable loans rose 0.7 points (5.5 to 6.2 per cent, December 2025 to July 2026), and what households were paid on all their deposits also rose about 0.7 points (2.8 to 3.5 per cent), so the gap between the two did not measurably widen (against all deposits, not only households’, the gap went from 2.5 to 2.6 points) at the one-decimal precision the RBA publishes ²¹²². This compares one loan rate with deposit rates and is not a bank margin; rounding could hide a change of up to about 0.1 to 0.2 points. On advertised rates, savers in transaction accounts (0.00 per cent throughout), cash management accounts (up 0.30 points) and one-month term deposits (up 0.20) got little or none of the rise; how many savers hold each product is not published ²³. Advertised bonus saver and online saver accounts rose 0.80 points, the bonus saver rate only if a deposit is made and nothing withdrawn each month ²³. APRA reports bank profit after tax of $42.5 billion in the year to June 2026, up 7.5 per cent; on THE RORT’s sum of APRA’s March and June quarter figures, profit in the two quarters that contained the rises was $20.33 billion against $20.06 billion a year earlier (up 1.4 per cent); net interest income for the year to June 2026 rose 5.1 per cent to $103.0 billion while loans grew about 6.6 per cent; and the March quarter bad-debt charge was the highest since at least 2021 ¹⁷. The ABS says financial corporations’ gross operating surplus rose 2.4 per cent in the June quarter 2026, “driven by growth in balances and margins”, as effective loan rates rose more than deposit rates, and 10.2 per cent over the year; the ABS singles out dwelling and business loans, and the figure is for the whole financial corporations sector, not banks alone ²⁴. On the fourth rise, Macquarie announced on 29 September that its variable home loan reference rates rise 0.25 points from 15 October, and its savings rates by 0.25, 0.05 and 1.85 points across its three balance tiers; by 4.46 pm AEST none of the big four had announced its response ²⁵²⁶.

Update, 30 September 2026. More of the record on the fourth rise, on advertised rates only: balances held in each product are not published, and THE RORT draws no conclusion about any bank’s margin from it. Macquarie’s own release of 29 September also raises its Transaction Account rate from 2.75 to 3.00 per cent, 25 basis points, on every balance tier from 15 October ³⁹. In September, before the decision, Macquarie’s Digital Term Deposit rates for $1 million or under rose by 5, 15, 15 and 20 basis points on 3, 6, 9 and 12 months between its term deposits page of 1 September and its page of 21 September (verified for the Digital Term Deposit only; the day or days of the rise are not on the record) ⁴⁰, and its fixed home loan rates for new owner-occupier loans (principal and interest, up to 70 per cent of the property’s value) rose in two steps, a net 0.30 to 0.50 points since 13 August ⁴¹; media reports date the first step to 8 September, and the second was reported on 24 September ⁴². Teachers Mutual Bank Limited announced on 29 September that it will raise its variable savings rates by 0.25 per cent a year from Thursday 1 October 2026 and its variable home loan rates by the same from 8 October 2026, across its five retail brands, and states no rate levels ⁴³. As at about 5.00 am AEST on 30 September none of the big four had announced a decision on the pages THE RORT read: CBA’s savings page, and Westpac’s and ANZ’s home loan pages, each dated 29 September, said they were reviewing their rates, CBA’s home loan page still showed 5 May 2026, and NAB’s still showed 3 February 2026 ⁴⁴.

Correction, 4 October 2026. The paragraph above gives Macquarie’s net fixed-rate rises since 13 August (0.30 to 0.50 points) without saying that they followed cuts. On 5 June Macquarie cut its one- to five-year fixed rates by 0.25, 0.40, 0.50, 0.35 and 0.45 points, from 6.44, 6.54, 6.59, 6.64 and 6.74 per cent, Canstar reported, to 6.19, 6.14, 6.09, 6.29 and 6.29 per cent, the same levels its own page showed on 13 August ⁴⁹. Its rates on 30 September, unchanged on 3 October, of 6.49, 6.59, 6.59, 6.64 and 6.64 per cent are 0.05 points above the pre-June levels at one and two years, level at three and four years, and 0.10 below at five (THE RORT’s arithmetic) ⁴⁹⁴¹. Most of the September rises reversed the June cuts. The figures and dates in the paragraph above stand; this adds the context they lacked.

Update, 29 September 2026. The banks’ own accounts are more mixed than the headline. CBA’s cash profit for the year to June 2026 rose 7 per cent to $10,982 million and it lifted its dividend 4 per cent; its margin, 2.05 per cent, was 3 basis points lower than the year before, though up 2 basis points on the first half of the financial year, and it calls the underlying margin ‘broadly stable’, with higher earnings on its deposit replicating portfolio and capital hedges largely offset by lower lending margins ²⁷. KPMG’s analysis of the majors’ half-year results, mostly before the 2026 rises, put combined profit at $15.2 billion, down 2.1 per cent, as operating costs rose 9.3 per cent while net interest income rose 4.9 per cent to $40.5 billion ²⁸. The Reserve Bank says the spread between lending rates and funding costs has increased since early 2025 ‘but remains well below its pre-pandemic levels’ ²⁹.

Update, 30 September 2026, evening. The big four have answered the fourth rise, on advertised rates only; THE RORT draws no conclusion about any bank’s margin from it. Between 5.40 pm and 5.43 pm AEST on 30 September, CBA ⁴⁵, Westpac ⁴⁶, NAB ⁴⁷ and ANZ ⁴⁸ had each announced, on their own pages and releases, a rise of 0.25 per cent a year in variable home loan rates, effective 9 October 2026: six days before Macquarie’s 15 October ³⁹ and one day after Teachers Mutual Bank Limited’s 8 October ⁴³. On savings, the only change any of the four had stated was Westpac’s: its Westpac Life total variable rate with bonus interest rises 0.25 per cent a year to 5.25 per cent, effective 9 October ⁴⁶. CBA’s savings page, dated 29 September, still said it was “currently reviewing” its savings rates, and its release says nothing about savings or term deposits ⁴⁵; NAB says it “regularly reviews its savings and deposit rates” ⁴⁷; ANZ says it “continues to review other interest rates” ⁴⁸. None of the four had stated a term deposit change. ANZ gives the only dollar figure, about $79 a month more on a $500,000 owner-occupier loan with principal and interest repayments ⁴⁸. The update of about 5.00 am above records the position at that time.

Update, 4 October 2026. NAB’s own record on its margin, which this article had not examined. NAB’s group net interest margin rose from 1.70% (half to March 2025) to 1.81% (half to March 2026) and was 1.79% in the June 2026 quarter. NAB’s own investor slides say the ‘benefit of rising rates’ shows up in its replicating portfolios and forecast a tailwind of about 5 basis points for the second half of FY26, while its lending margin was squeezed by competition. Cash earnings excluding a one-off software charge were up 0.1% on a year earlier in the March 2026 half. In the June 2026 quarter they were up 4% on a year earlier and 2% on the March half’s quarterly average, a rise NAB put mainly down to lower credit impairment charges. Full-year FY25 cash earnings fell 0.2% and statutory profit fell 2.9% ⁵⁰⁵¹. The slide reads “Benefit of rising rates largely reflected in replicating portfolios”, and the tailwind of “~5bps” is NAB’s estimate as at 31 March 2026, “Based on market implied 3 and 5 year swap rates trajectory as of 31 March 2026 and stable balances”: a forecast made before the May and September rises, not an outcome ⁵⁰. NAB’s own margin bridge for the March 2026 half shows its lending margin cut the group margin by 4 basis points (Australian home lending 2, Australian business lending 2), while replicating portfolios added 3, deposits 1, liquid assets 1 and Markets and Treasury 2, on THE RORT’s reading of NAB’s chart ⁵⁰. So the lending margin itself narrowed, and the group margin widened through replicating portfolios, deposits and Markets and Treasury ⁵⁰⁵¹. NAB’s own account of the half: “Excluding a 2 bps increase from M&T and a 1 bp benefit from liquid assets, NIM was stable reflecting higher earnings from the deposit replicating portfolio combined with lower deposit cost and deposit mix benefits, offset by lending competition.” ⁵¹ NAB named lending competition as the drag on its margin in the December 2025 quarter, the March 2026 half and the June 2026 quarter ⁵¹. No NAB or APRA margin or profit figure we have read covers any period after 30 June 2026. NAB’s FY26 result on 5 November covers the year to 30 September and so cannot show the effect of the September 2026 rate rise on its loan and deposit pricing; the March 2027 half, reported on 5 May 2027, is the first full half that can ⁵². As at 14:23 AEDT on 4 October NAB’s headline savings rates were unchanged since 17 September ⁵³⁵⁴. In each of the three earlier 2026 rises NAB’s savings rise took effect on the same day as its home loan rise, ten days after the decision, and this time that day is 9 October ⁵⁴⁴⁷. A new article in this series, Above the 0.25, sets out NAB’s fixed-rate rises, the funding test and the case on each side.

02The structural reason: oligopoly and deposit stickiness

In 2022-23 the pass-through was incomplete on both sides: outstanding variable mortgage rates rose about 70 basis points less than the cash rate and total deposit rates about 75 per cent as much, so neither borrowers nor savers received the full 425 basis points ¹⁶. In 2026 the full rise reached advertised variable mortgage rates, and little or none reached transaction, cash management and one-month term deposit rates ²⁰²³. That is not illegal. The account below, made about the 2022-23 cycle, says the banks behave as a small pack that more competition would restrain. For 2026 the Reserve Bank’s paid and charged series show household deposit rates rising about as much as the rate owner-occupiers were charged on outstanding variable loans, with the shortfall at product level (see the update, 29 September 2026, in the first section) ²¹²²²³.

The four pillar policy was designed to maintain competition by preventing the Big Four from merging. The argument made about the 2022-23 cycle is that, in practice, with only four major banks, the result is oligopolistic parallel behaviour on both mortgage rates and deposit rates: when one bank raises its mortgage rate, the others follow, and when one bank fails to raise deposit rates, the others have no competitive incentive to offer more. It is an argument, not a measurement, and it is not a finding about 2026.

Depositors are also simply less responsive than borrowers. A mortgage borrower on a variable rate has no choice: the rate increases automatically. A deposit holder can move savings to a term deposit or a competitor, but many do not. The inertia of savers allows banks to delay deposit rate rises without immediately losing customers.

Update, 29 September 2026. The ACCC’s 2023 retail deposits inquiry found 4 major and 6 mid-tier banks supply 89 per cent of retail deposits, and that 71 per cent of bonus-interest accounts did not receive the bonus rate in an average month in the first half of 2023 ³⁰. The RBA’s own series for bonus saver rates assumes the conditions (a deposit made and nothing withdrawn each month) are met ²³.

03The Senate hearings: documented, unchanged

The Senate Economics Committee held multiple hearings on bank profits during the rate cycle. THE RORT has not re-checked the record of these hearings for this update. Bank executives appeared, defended their margins as reflecting competitive market outcomes, and noted that mortgage competition was intense. The government did not introduce a windfall levy on bank profits. Both major parties received donations from the banking sector.

Update, 29 September 2026. THE RORT has found no levy on bank profits, and no Senate vote on a bank windfall tax in 2026 in a search of the Senate Journals ³¹. A different bank levy does exist: since 1 July 2017 the Major Bank Levy has applied to certain liabilities of banks with more than $100 billion in liabilities, 0.06 per cent a year at the Parliamentary Budget Office’s May 2024 costing, capturing five banks; ANZ alone booked $230 million for the March 2026 half ³². The PBO assumed 75 per cent of any increase would be passed on to customers ³². The Greens took a PBO-costed increase in the levy (to 0.08 per cent a quarter, from 0.015 per cent a quarter, plus a levy recouping Term Funding Facility benefits) to the 2025 election, estimated to improve the budget by about $35.1 billion over the forward estimates ³³. On the last sentence of the paragraph above: on their own AEC returns for 2024-25, CBA, Westpac, NAB, ANZ and the Australian Banking Association disclosed, as donations, payments of $340,501 to Labor and $394,557 to the Coalition, similar amounts to both major sides; the returns do not show why any party acted as it did ³⁴. The House Economics Committee’s review of the four major banks has its next hearing on 12 November 2026 ³⁵.

Labor senators questioned banks on deposit rate behaviour at committee hearings, and the banks explained their pricing as a competitive market outcome. THE RORT has not re-checked the record of those hearings for this update; the measured 2022-23 record is in the correction above (neither borrowers nor savers received the full rise) ¹⁶. No structural change resulted.

04The wealth transfer

Rate rises are a transfer from net debtors to net creditors. On the Australia Institute’s account ¹¹, household debt is about double household deposits, so on that account rate rises are net negative for the household sector in aggregate: borrowers pay more than depositors receive. Outright owners, about a third of households, gain, though the median gain is about a third of the median mortgagor’s loss ³⁸.

Whether the banking sector is the beneficiary depends on the period. In the first year of the 2022-23 rises the margin widened (net interest income over loans 2.12 to 2.35 per cent), which is banks keeping part of the difference between what borrowers paid extra and what depositors received extra, and industry net interest income rose about 16 per cent, before competition compressed the margin ¹⁷. In 2026, on the Reserve Bank’s outstanding-rate series, the rate charged to owner-occupiers and the rate paid to households rose by the same 0.7 points, so that comparison does not show the gap widening, and the year’s profit growth was small in the two rise quarters (see the updates of 29 September 2026 above) ¹⁷²¹²².

Update, 29 September 2026. The Reserve Bank itself pays interest on the reserves banks hold with it, their Exchange Settlement balances: $12,603 million in 2022/23, $14,651 million in 2023/24 and $9,674 million in 2024/25 on its audited accounts, about $36.9 billion over the three years (THE RORT’s sum). It is paid to all Exchange Settlement account holders and the RBA does not publish it by institution ³⁶. The RBA’s own review of the pandemic Term Funding Facility puts the facility’s cost to the RBA at about $9 billion, about $4 billion of it from the Board’s decision to extend the facility in early September 2020, when banks had taken up only 60 per cent of their initial allowances; the review says this suggested the banks ‘did not need TFF funding’ to meet borrowers’ demand ³⁷. The RBA attributes the surge in these balances to its own pandemic package, the Term Funding Facility and bond purchases, and David Jacobs, the RBA’s Head of Domestic Markets, last stated in a speech on 25 August 2026 that ‘The ES rate is set 10 basis points below the cash rate target’; the rate now in force is not published ³⁶. For the majors the facility cut average funding costs by about 5 basis points, and mortgage rates fell more than the cash rate from February 2020 to February 2022 (the RBA’s table) ³⁷. The same review says borrowers who locked in low fixed rates were ‘the ultimate beneficiaries’, which is the RBA’s claim ³⁷. The RBA’s own losses on these pandemic tools fell on its balance sheet (negative equity of $5.3 billion at June 2025), and it chose to rebuild capital from earnings with no government injection ³⁶.

The 13 rises of 2022-23 were designed to reduce demand to fight inflation. They accomplished this partly by making borrowing more expensive for households. Borrowers, who could not reduce their mortgage, paid more; banks’ margins widened in the first year of the rises before competition compressed them from mid-2023 ¹⁷.

In the first year of the 2022-23 rises the banking system’s net interest income rose about 16 per cent. In 2026 APRA reports bank profit of $42.5 billion for the year to June, up 7.5 per cent, and only 1.4 per cent higher in the two quarters that contained the rises. In 2022-23, outstanding variable mortgage rates rose about 70 basis points less than the cash rate, and total deposit rates about 75 per cent as much. In the first year of those rises the gap widened. Committee hearings were held, though THE RORT has not re-checked their record for this update. No windfall levy on bank profits was introduced; a Major Bank Levy on liabilities has applied since 2017. Banks disclosed payments as donations to both major parties, in similar amounts; the returns do not show why any party acted as it did.

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