RBA Rate Decision March 2026: Cash Rate Hiked to 4.10%

The Decision

The RBA Board raised the cash rate target by 25 basis points to 4.10% on 18 March 2026. This was the second consecutive hike, following the 25 basis point rise delivered at the 4 February meeting that took the cash rate from 3.60% back up to 3.85%. Both hikes mark the start of a new tightening cycle after the RBA spent the last quarter of 2025 on hold at the bottom of the previous easing cycle.

The Board's statement pointed to persistently elevated inflation, the pass through of higher fuel and oil derived prices into broader price pressures, and a labour market that remains tight. The language shifted more hawkish compared with February, explicitly leaving the door open to further increases at upcoming meetings. Westpac's economics team noted after the decision that the Board appears willing to err on the side of caution and tighten more aggressively than markets had previously expected.

What Changed Since the Last Meeting

• Headline CPI came in hotter than expected, with Westpac now forecasting a Q2 peak of around 5.4% year on year.
• Trimmed mean inflation is running well above the 2 to 3% target band, with Westpac expecting a peak near 4%.
• Fuel prices continued to rise on the back of Middle East tensions, feeding through into transport and other price categories.
• The labour market remained tight with unemployment holding low, giving the Board little room to pause.
• Wage growth ticked higher, adding to concerns about second round effects.

The overall picture is of inflation that is proving stickier than the RBA had hoped at the end of 2025, combined with external shocks the Board cannot control. Both factors have pushed the Board into the new tightening cycle.

Impact on Home Loan Rates

Pass through was fast. Within days of the 18 March decision, all Big 4 banks had announced 25 basis point increases to variable home loan rates. CBA, ANZ and NAB took effect on 27 March, Westpac on 31 March, and Macquarie followed on 2 April. Second tier banks, non banks and most credit unions moved over the following fortnight. The full 25 basis point hike has now been passed through by the majority of the Lendera panel.

The average owner occupier variable rate across Lendera's panel of 60+ lenders is now 6.14%, up from 5.89% at the end of February. The lowest variable rate on panel is 5.69% from a non bank lender for borrowers at 80% LVR or lower. The Big 4 banks average 6.37% variable for owner occupiers.

Fixed rates have moved even further than variable. Markets are pricing in additional hikes, so lenders have repriced fixed rates aggressively. The average 2 year fixed rate across the panel is now 6.29% and the average 3 year fixed is 6.45%. Some lenders have pushed fixed rates for higher LVR owner occupier and investor borrowers above 7.00%, the first time that has happened in over a year.

For the full rate breakdown across 60+ lenders, see our March 2026 Rate Report.

Big 4 Forecast Split

After the March decision, forecasts across the Big 4 banks diverged notably. The table below summarises where each of the four majors sees the cash rate headed.

Westpac is the clear outlier. Its 30 March economics update revised the Westpac peak forecast up to 4.85%, noting that the Board would likely err on the side of caution as the fuel shock continued to feed into broader prices. Westpac now expects 25 basis point hikes at the May, June and August meetings, with cuts not pencilled in until 2028.

ANZ, CBA and NAB have taken a more dovish view, expecting one final hike at the 5 May meeting to take the cash rate to 4.35%, then a hold for the rest of 2026. The difference between the two camps comes down to how much weight each gives to the fuel shock pass through and how sticky each expects services inflation to be.

A 25 basis point hike at the 5 May meeting is the base case across all four majors, so variable borrowers should plan for another round of pass through within a fortnight of that decision regardless of which forecast is closer to reality.

What Borrowers Should Do Now

If your rate is above the panel average of 6.14%: review immediately. Non bank lenders and some second tier banks still offer rates below 6.00%. A rate review with a broker could save thousands over the life of your loan, and waiting until after the 5 May hike means starting from a higher base.

If your lender has not yet passed on the March hike: enjoy the brief window, but expect it soon. Use the time to compare your rate against the panel and have a conversation with your broker before the May meeting.

If you are on a fixed rate expiring in the next 3 months: start comparing now. The revert rate your lender applies at the end of the fixed term will almost certainly be higher than what you can negotiate with your current lender or a new one. Another hike may land before your term ends.

If you are considering fixing: run the numbers carefully. Fixed rates are priced above variable and already embed some of the Westpac forecast path. Fixing protects against the Westpac scenario of three more hikes but gives up upside in the ANZ, CBA and NAB base case of only one more. The break even depends on which forecast you believe.

If you are about to buy: stress test your borrowing capacity against at least one more 25 basis point hike, and consider building in buffer for the Westpac scenario if you want headroom. Speak with a broker to model different rate paths against your budget.

If you are an investor: review both your P&I and IO rates carefully. The Big 4 passed through the March hike on investor products at the same time as owner occupier, but the sharpest deals on panel are now concentrated in fewer lenders.

Cash Rate History

Vish

Founder and Licensed Mortgage Broker

Vish studied medicine and law at the University of Sydney before switching to finance broking after no one would help him get a loan for his first property. He bought 3 properties before turning 24 and started Lendera because he believes borrowers deserve transparency, not gatekeeping. You can compare rates from 60+ lenders without entering any personal details, access the Home Loans Academy and first home buyer and refinancing checklists at no cost, and speak to his team of brokers when you are ready.

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