The biggest question for Australian borrowers in 2026: Are interest rates going up again?
1. RBA Began 2026 With a Rate Hike
At its February 2026 meeting, the RBA lifted the cash rate from 3.6% to 3.85% in response to stronger‑than‑expected inflation.
Impact on homeowners
- A $600,000 mortgage now costs around $90 extra per month.
- Banks are expected to pass increases on to variable‑rate customers immediately.
2. More Rate Hikes Are Possible
Economists from multiple institutions (KPMG, Capital Economics, BNY, Indeed) warn at least one more rate rise could occur by May if inflation remains sticky.
RBA officials have noted inflation is proving more persistent than expected. [miragenews.com]
3. Why the RBA May Keep Rates Higher
- Private demand remains strong.
- Labour markets are still tight.
- Housing activity is picking up, adding inflation pressure.
What borrowers should do
- Review your rate with a broker — many banks charge existing customers higher rates than new clients.
- Stress‑test your budget for potential additional 0.25–0.50% hikes.
- Consider making extra repayments while rates remain elevated.