RBA Rate Rises in 2026: What to Expect and How to Prepare

If you've got a mortgage, you probably have a love-hate relationship with the Reserve Bank of Australia. They decide the cash rate, which pretty much controls what you pay on your home loan. And in 2026, there's a decent chance they're going to raise it again.

Not great news if you're already feeling the pinch. So let's talk about what's happening, how much it could cost you, and what you can actually do about it.

Quick recap: What is the RBA cash rate?

The RBA sets the "cash rate" - basically the interest rate banks charge each other for overnight loans. When the RBA raises or lowers the cash rate, banks almost always pass that on to mortgage holders within a few days.

Translation: When the RBA moves, your mortgage repayments move too.

Why would the RBA raise rates in 2026?

One word: inflation.

The RBA's job is to keep inflation between 2-3%. If prices are rising too fast (wages, rent, groceries, petrol), they raise interest rates to cool things down. Higher rates = people borrow less, spend less, and inflation slows.

In 2022-23, the RBA raised rates 13 times in a row (from 0.1% to 4.35%) because inflation hit 7.8% - way higher than their target. Mortgage holders got smashed. The average person with a $500k loan saw repayments jump by about $1,200-1,500 per month over that period.

Fast forward to 2026: If inflation stays stubborn, the RBA might raise rates again. Not 13 times (hopefully), but even one or two hikes can hurt.

How much would a rate rise cost you?

This depends on your loan size and how much rates go up. Here's a rough guide:

Example: $500,000 loan, 25 years remaining

• +0.25% rate rise: About $75-80 extra per month
• +0.50% rate rise: About $150-160 extra per month
• +1.00% rate rise: About $300-320 extra per month

Doesn't sound like much? It adds up. A 0.5% rise is an extra $1,900 per year. Over the life of your loan, that's tens of thousands in extra interest.

Want to see exactly how much it would cost you? Use our Rate Rise Impact Calculator - plug in your loan amount, current rate, and see what happens at different scenarios.

What can you do about it?

You can't control the RBA. But you can control how you respond.

1. Budget for higher repayments now

If you're on a variable rate, assume rates will go up at some point. Add an extra $100-200/month to your repayment now (if you can). That way:

• You'll pay off your loan faster
• You'll save on interest
• When rates do rise, you're already used to the higher payment

2. Consider refinancing

If your current rate is above 6.5%, you're probably paying too much. Banks are competing hard for new customers right now, and you can often get a better deal by switching.

Use our Refinance Calculator to see if it's worth it. You might save hundreds per month just by moving to a better rate.

3. Lock in a fixed rate (maybe)

Fixed rates let you lock in your interest rate for 1-5 years. If you think variable rates are going up, fixing now could save you money.

The catch: Fixed rates are usually higher than variable right now. And if rates go down, you're stuck paying the higher rate. It's a gamble.

Most people split their loan - half variable, half fixed. That way you get some protection but still have flexibility.

4. Use an offset account

If you have savings, an offset account can reduce the interest you pay without extra repayments. Every dollar in your offset reduces the loan balance the bank charges interest on.

Example: $500k loan with $20k in offset = you only pay interest on $480k.

Check our Offset Mortgage Calculator to see how much you could save.

What's the RBA likely to do?

Honestly? No one knows for sure. Economists get it wrong all the time.

But here's the consensus as of March 2026:

• Inflation is still above the 2-3% target (hovering around 3.5-4%)
• Unemployment is low, wages are rising
• The RBA is cautious about raising too fast (they don't want to crash the housing market)

Best guess: 1-2 small rate rises (0.25% each) over the next 12 months. Maybe none if inflation drops faster than expected.

Either way, it pays to be prepared.

Bottom line

Rate rises suck. But they're part of owning a home in Australia, especially if you're on a variable loan.

The good news? You have options. Refinance if you're paying too much. Budget for higher repayments. Use an offset account. And if you're really worried, talk to a mortgage broker - they can help you lock in a better deal before rates go up.

And if nothing else, use our Rate Rise Impact Calculator to see what you're dealing with. Knowledge is power (and also slightly depressing, but at least you'll know).