RBA Interest Rates May 2026: What It Means for Your Mortgage

The RBA's next monetary policy meeting is 4–5 May 2026 — not April, as many assume. With the cash rate now at 4.10% after a February cut and March rise, the May meeting is the next live event that could move your mortgage. Here's what to expect, what it means for your repayments, and what to do right now.

Note: If you're reading this after 5 May 2026, the rate decision has already been announced. Check rba.gov.au for the latest outcome.

Where rates are right now

The RBA cut the cash rate by 15 basis points at its 2-3 February meeting, moving from 4.00% to 3.85%. It then raised by 25 basis points at the 16-17 March meeting, taking the cash rate target to 4.10%. So the recent path was a cut followed by a rebound higher — not two consecutive hikes from 4.35%.

For context: two years ago, in March 2024, the cash rate was 4.35%. So we're now back to roughly the same level, though the path to get here has been different.

The May 2026 meeting: what to expect

The RBA meets eight times a year under its current structure (it reduced from 11 meetings in 2024). The next opportunity to change the cash rate is 4–5 May 2026.

The RBA's core mandate is keeping inflation within the 2–3% band over the medium term. As of early 2026, both headline CPI and core (trimmed mean) inflation were still central to the outlook. The May meeting will assess the latest economic data, including employment, consumer spending, and whether the February cut and March rebound are changing financial conditions in the way the Board wants.

Possible outcomes:

• Hold: The RBA pauses to assess the impact of the recent February cut and March rise. This is the base case if inflation is showing signs of cooling.
• Rise: If inflation remains stubborn, another 25 basis points — taking the cash rate to 4.35%.
• Cut: Unlikely in the near term unless inflation drops significantly below target faster than expected.

What this means for your mortgage repayments

Most Australian mortgages are variable rate, which means the RBA cash rate moves more or less directly affect your interest rate. Here's the repayment impact on a $500,000 principal and interest loan over 30 years at different rate levels:

Use our Mortgage Calculator to see the exact impact on your specific loan amount and rate.

Stress-testing your mortgage

The RBA itself assesses borrowers at roughly 3% above the current product rate. This is the serviceability buffer built into lending standards. You should do the same:

If your current variable rate is 6.2%, the bank assessed you at around 9.2%. You should be able to afford repayments at that level — but can you actually comfortably afford them without cutting your lifestyle to ribbons?

Run your own numbers with our Rate Rise Impact Calculator to see what happens if rates move 1%, 2%, or even 3% higher.

Fixed vs variable: should you switch?

Fixed rates are currently higher than variable rates for most lenders — banks are pricing in the possibility of further rises. The typical fixed rate on offer for a 3-year term in early 2026 is around 6.8–7.3%, versus a variable rate of approximately 6.2–6.5%.

The argument for fixing is certainty — you know exactly what you'll pay for the fixed period. The argument against is that if rates fall, you're locked in. Given the RBA has just raised twice in a row, the market expectation is not for rapid cuts.

Most financial advisors suggest a split: keep part of your loan variable (to retain flexibility and access to offset account) and fix the rest if you want certainty on part of your repayments.

What to do RIGHT NOW

• Run the stress test. Work out what repayments look like at 2% above your current rate. Can you still service them? If not, you need a plan before the May meeting.
• Check your offset buffer. Having 3-6 months of repayments in an offset account is your hedge against rate rises and unexpected job loss.
• Check your current rate. If you're on 6.5%+ variable and haven't renegotiated or refinanced in 18 months, you may be paying more than you need to. Even a 0.5% rate reduction on a $500k loan saves ~$145/month.
• Lender switching. If your current lender won't negotiate, it's worth talking to a broker about what other lenders are offering. Switching lenders costs ~$500-1,000 in fees but can save tens of thousands over a few years.

The bigger picture

Rising rates are never fun for mortgage holders, but it's worth remembering the context: the RBA is raising rates because inflation is above target. That means the economy is still running hot in some areas. The alternative — letting inflation run unchecked — is worse for savers, for anyone on fixed incomes, and for the long-term health of the economy.

The May meeting is the next live event to watch. Between now and then, use the time to stress-test your budget, check your offset buffer, and make sure you're on the best rate available. You can't control what the RBA does — but you can make sure you're in the best position to absorb it.