RBA Interest Rates May 2026: What It Means for Your Mortgage
The RBA's next cash rate decision is 4–5 May 2026, not April. After a cut in February and a rise in March, we're sitting at 4.10%. The May meeting is the next one that could move your mortgage. So what should you expect, and what should you do now?
If you're reading this after 5 May 2026, the decision is already out. Check rba.gov.au for the latest.
Where rates are right now
The RBA cut the cash rate by 15 basis points at the 2–3 February meeting, taking it from 4.00% to 3.85%. Then it lifted rates by 25 basis points at the 16–17 March meeting, pushing the cash rate target to 4.10%. So no, it wasn't two straight hikes from 4.35%. It was down, then back up again.
For context, the cash rate was 4.35% in March 2024. So we're basically back near the same level, only by a different path.
The May 2026 meeting: what to expect
The RBA now meets eight times a year, down from 11 meetings in 2024. The next chance it gets to move rates is 4–5 May 2026.
The big thing it's watching is inflation. The RBA wants inflation in the 2% to 3% band over time. Heading into May, both headline CPI and trimmed mean inflation still matter. The Board will also be watching jobs, spending, and whether the February cut and March rise are doing what they wanted.
Possible outcomes:
- Hold: Still the base case if inflation looks like it's easing and the RBA wants more time.
- Rise: If inflation stays sticky, another 25 basis points would take the cash rate to 4.35%.
- Cut: Looks unlikely unless inflation drops a lot faster than expected.
What this means for your mortgage repayments
Most Aussie home loans are variable. So when the RBA moves, your repayments usually feel it pretty quickly. Here's what a $500,000 principal-and-interest loan over 30 years looks like at different rate levels:
| Cash Rate / Loan Rate | Monthly Repayment | vs Current (4. 10%) |
|---|---|---|
| Current: 4. 10% (6. 2% loan rate) | ~$3, 056 | Current baseline |
| +0. 25% → 4. 35% (6. 45% loan rate) | ~$3, 151 | +$95/mo |
| +0. 50% → 4. 60% (6. 70% loan rate) | ~$3, 247 | +$191/mo |
| +1. 00% → 5. 10% (7. 20% loan rate) | ~$3, 443 | +$387/mo |
| +2. 00% → 6. 10% (8. 20% loan rate) | ~$3, 742 | +$686/mo |
Use our Mortgage Calculator to run your own numbers on your exact loan.
Stress-testing your mortgage
Banks already test borrowers at roughly 3% above the product rate. That's the serviceability buffer. You should test your own budget the same way.
If your variable rate is 6.2%, the bank probably checked you at around 9.2%. On paper, you passed. But could you handle repayments at that level without smashing your lifestyle or burning through savings? That's the real question.
Use our Rate Rise Impact Calculator and see what 1%, 2%, or even 3% higher looks like.
Fixed vs variable: should you switch?
Right now, fixed rates are usually higher than variable rates because banks are still pricing in the risk of more rises. Three-year fixed deals in early 2026 are sitting around 6.8% to 7.3%, compared with roughly 6.2% to 6.5% variable.
If you fix, you get certainty. If rates fall, you're stuck. If you stay variable, you keep flexibility but you'll feel any extra rises straight away.
For plenty of borrowers, the middle ground is a split loan. Keep part variable so you still get offset access and flexibility. Fix the rest if you want some certainty.
What to do RIGHT NOW
- Run the stress test. Check what your repayments look like 2% above your current rate. If that number looks ugly, don't wait for May.
- Check your offset buffer. Three to six months of repayments sitting there gives you breathing room if rates rise or life goes sideways.
- Check your current rate. If you're paying 6.5%+ variable and you haven't renegotiated or refinanced in a while, you're probably overpaying. A 0.5% cut on a $500k loan saves about $145 a month.
- Shop around. If your lender won't move, talk to a broker. Switching might cost $500 to $1,000, but the longer-term savings can be much bigger.
Mortgage Calculator, see repayments at current and higher rates
Rate Rise Impact Calculator, how much extra you'd pay per month
Refinance Calculator, is switching worth it?
The bigger picture
Higher rates hurt mortgage holders. No point pretending otherwise. But the RBA raises rates because inflation is still running too hot. If inflation stays loose, it hurts savers, people on fixed incomes, and the economy longer term.
The May meeting is the next one to watch. Until then, stress-test your budget, build your buffer, and make sure your rate isn't a dud. You can't control the RBA. You can put yourself in a better spot before it moves.
Frequently asked questions
When is the next RBA interest rate decision in 2026?
The RBA's next monetary policy meeting is 4-5 May 2026, with the rate decision released at 2: 30 pm AEST on 5 May. There's no April meeting. If you're reading this after that date, check rba. gov. au for the latest decision.
What's the current RBA cash rate?
The RBA cash rate target is 4. 10% as of March 2026, after a 25 basis point rise at the 16-17 March meeting. That followed a February 2026 move from 4. 00% down to 3. 85%.
How much does a 1% rate rise add to a $500, 000 mortgage?
On a $500, 000 principal and interest loan over 30 years at 6. 2%, a 1% rate rise increases monthly repayments by roughly $300/month. Use our mortgage calculator to run the numbers on your actual loan amount.
Should I fix or stay variable with my home loan?
Fixed rates are currently higher than variable rates in most cases, banks are pricing in further rises. If you fix and rates fall, you're stuck. If you stay variable and rates rise further, you're exposed. Most financial advisors suggest keeping at least part of your loan variable to retain flexibility.
What do I do right now to prepare for potential rate rises?
1. Stress-test your budget at 2% above your current rate. 2. Build an offset/redraw buffer of 3-6 months of repayments. 3. Check if your current lender is competitive, refinancing while rates are rising is harder but switching lenders saves 0. 5-1% on your rate.