Why Are the Banks Forecasting Back-to-Back Hikes?
Australia’s big four banks are divided on the timing, but the direction of travel is clear. Westpac chief economist Luci Ellis points to persistently higher oil prices and the RBA’s focus on headline inflation as the key drivers. NAB economists have described the current situation as one where “the policy of least regret is to hike in March,” citing a tight labour market, higher-than-expected inflation, and limited spare capacity in the economy.
The RBA hiked the cash rate to 3.85% in February 2026 — its first increase in over two years — after inflation rose materially in the second half of 2025. With inflation expected to remain above 3% throughout 2026, further tightening is firmly on the agenda. By contrast, CBA and ANZ still expect a single hike in May, meaning borrowers face a genuinely uncertain environment ahead of the March board meeting.
How Much More Could You Be Paying?
The numbers are stark. According to Canstar data, a single 0.25% hike in March would add approximately $91 per month to repayments on a $600,000 loan (based on a 25-year term, assuming banks pass on the full increase). If the RBA delivers three hikes across February, March, and May, monthly repayments on the same loan would be roughly $272 higher than at the start of 2026.
For households already managing tight budgets, this level of increase can be the difference between financial comfort and mortgage stress. Canstar’s Sally Tindall urges borrowers to “stress-test their budgets at mortgage rates at least 0.5 percentage points higher” and to ensure their existing loans remain competitive ahead of any further RBA action.
What Should Borrowers Do Right Now?
Whether or not the RBA hikes in March, there are proactive steps every borrower should consider:
- Review your current interest rate: With the rate environment shifting quickly, the rate you secured 12–24 months ago may no longer be competitive. Lenders regularly update their offerings, and you may find a more suitable option available now.
- Stress-test your budget: Model your repayments at rates 0.5% to 1% higher than today. If those numbers create discomfort, it’s time to act before rates rise further.
- Consider refinancing: Switching to a loan with more competitive terms — whether a variable rate with extra features or a fixed rate for certainty — could provide meaningful relief. A mortgage broker can compare competitive choices across multiple lenders on your behalf.
- Speak to a professional: With so much uncertainty in the outlook, personalised assistance from a qualified mortgage broker can help you navigate your options clearly and confidently.
The Benefit of Acting Now, Not After the Hike
One of the most common mistakes borrowers make is waiting until after a rate rise to review their home loan. By the time the RBA has moved, lenders have often already repriced their products. Acting now — while you still have time before the March decision — puts you in a stronger position to secure competitive choices and lock in terms that work for your financial situation.
Australia’s property market and lending landscape are complex, and no two borrowers are in the same position. A tailored review of your home loan, taking into account your income, expenses, loan balance, and goals, is the most effective way to make an informed decision.
Need personalised assistance?
Contact Daniel Nguyen, Mortgage Broker at Finance Hub and Networks.
📞 0430 11 11 88
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