RBA Hikes Cash Rate to 4.10%: What the March 2026 Decision Means for Your Mortgage
The Reserve Bank of Australia raised the cash rate by 25 basis points to 4.10 per cent at its 17 March meeting, marking the second consecutive hike after February's increase from 3.60 to 3.85 per cent. The decision was narrowly split, with five board members voting to increase and four voting to hold.
For mortgage holders, it means repayments have now risen by roughly $300 per month on a $600,000 variable loan compared to the start of the year. And there may be more to come.
Why the RBA Hiked Again
The board cited several factors that forced its hand:
- Inflation rebounded: After substantial declines from the 2022 peak, inflation picked up materially during the second half of 2025. The three rate cuts delivered through 2025 stimulated private demand more than expected
- Labour market tightened: Unemployment has been running below RBA forecasts, keeping wage pressures elevated
- Fuel price shock: Sharply higher fuel prices driven by the Middle East conflict have fed through to broader costs
- Housing activity accelerated: The 2025 rate cuts lit a fire under property markets, with national dwelling values up 9.9 per cent year-on-year
In the RBA's own words, "inflation risks remain tilted to the upside" and the board judged that leaving rates unchanged would be inconsistent with returning inflation to the 2 to 3 per cent target band within a reasonable timeframe.
Where Rates Stand Now
All four major banks passed on the full 0.25 per cent increase to variable rate customers. Here is where the competitive owner-occupier rates sit as of April 2026:
- Westpac: 5.74 per cent (lowest among the Big 4)
- CBA: 5.84 per cent
- ANZ: 6.00 per cent
- NAB: 6.19 per cent
Standard variable rates from the major banks now range from 6.99 to 7.14 per cent. If you are still on your bank's standard variable rate, you are almost certainly paying well above what is available.
Fixed rates have also risen as banks price in expectations of further hikes. The Big 4 are now offering 2-year fixed rates between 6.29 and 6.39 per cent, and 3-year fixed rates between 6.19 and 6.29 per cent. Competitive non-bank lenders are offering variable rates from 6.34 per cent and 2-year fixed from 5.99 per cent.
Is Another Hike Coming in May?
The short answer: probably. All four major banks — CBA, Westpac, ANZ, and NAB — now forecast another 25 basis point hike at the 5 May meeting, which would push the cash rate to 4.35 per cent. Market pricing as of early April implies a 62 per cent probability of a May increase.
The critical data point will be the Q1 2026 CPI figures, due in late April. If inflation comes in hotter than expected, a May hike is all but certain. If the numbers show genuine easing, the RBA may pause — but the market is not betting on it.
A move to 4.35 per cent would take the cash rate back to its October 2023 peak. On a $600,000 variable mortgage, that would add another $95 per month to repayments on top of what borrowers are already paying.
What This Means for Borrowing Power
The two 2026 rate hikes have already reduced maximum borrowing capacity by approximately:
- Single average-income borrower: Down roughly $25,000
- Dual-income couple: Down roughly $49,000
If the cash rate reaches 4.35 per cent in May, these figures will shrink further. Buyers who were pre-approved at the lower rates may need to reapply or adjust their target price range.
What Borrowers Should Do Right Now
- Check your rate: Visit our rates comparison page and compare what you are paying against what is available. If your rate is more than 0.30 per cent above the lowest advertised rate for your loan type, refinancing could save you thousands
- Lock in pre-approval: If you are looking to buy, get pre-approved before the May decision. Your borrowing capacity at 4.10 per cent is higher than it will be at 4.35 per cent
- Consider fixing a portion: With rate uncertainty at its highest since 2022, splitting your loan between fixed and variable can hedge your risk. A 1-year fixed rate from NAB at 5.74 per cent is well below where variable rates may head
- Build a buffer: Do not borrow to your absolute maximum. Give yourself headroom for at least one more rate hike. If rates stay steady or eventually fall, the extra capacity becomes equity. If they rise, you can still meet repayments comfortably
- Talk to a broker: A mortgage broker can assess your specific situation across 30-plus lenders and find the best rate for your circumstances — at no cost to you. Find a broker near you
The Bigger Picture
Twelve months ago the consensus was that rates had peaked and the only direction was down. The three cuts through 2025 confirmed that view. Then inflation came back, the RBA reversed course, and here we are with two hikes in the first quarter of 2026.
The lesson is clear: nobody can reliably predict where rates are going. What you can control is your loan structure, your lender choice, and your buffer. Focus on those, and you will be well-positioned regardless of what the RBA does next.