The Short Answer
Yes, rates are going up. The RBA hiked in February 2026 (+25bp to 3.85%) and again in March 2026 (+25bp to 4.10%). These were the first rises since the 2025 easing cycle ended at 3.60% in August. All four Big 4 banks expect another rise at the 5 May meeting. Beyond that, forecasts split.
Big 4 Forecast Split
After the March decision, forecasts across the Big 4 banks diverged notably.
| Forecaster | Further Hikes Expected | Expected Peak | First Cut |
|---|---|---|---|
| Westpac | 3 more (May, Jun, Aug) | 4.85% | 2028 |
| ANZ | 1 more (May) | 4.35% | Late 2027 |
| CBA | 1 more (May) | 4.35% | Late 2027 |
| NAB | 1 more (May) | 4.35% | Late 2027 |
Westpac is the outlier. Its 30 March economics update revised the peak forecast up to 4.85%, citing the fuel shock pass through and stickier services inflation. The other three majors expect one final hike at the 5 May meeting then a hold for the rest of 2026. The difference comes down to how much weight each gives to the fuel shock and the tight labour market.
The Next RBA Meeting
The next RBA cash rate decision is scheduled for 5 May 2026. A 25 basis point hike at this meeting is the base case across all four Big 4 banks, which would take the cash rate to 4.35%. Variable home loan rates typically rise by the same amount within two to four weeks of the decision, so if you are on a variable rate you should plan for another round of pass through in mid to late May.
The Board's decision will be influenced by three data releases in the weeks before the meeting:
- Q1 CPI (released late April). If trimmed mean inflation comes in hotter than expected, a hike is virtually locked in. If it surprises to the downside, the RBA may pause.
- April labour force (released mid May, before the meeting). A soft print would give the Board cover to pause, a strong print locks in the hike.
- Retail sales and spending data. If consumer spending is slowing meaningfully, the Board has an argument to hold.
Why The RBA Turned Hawkish
The RBA reversed course in February 2026 after spending the last quarter of 2025 on hold at 3.60%. Three factors drove the pivot:
- Inflation surprised to the upside. Q4 2025 CPI came in hotter than the Board expected, with trimmed mean inflation picking up instead of continuing to fall toward the 2 to 3% target band.
- The Middle East fuel shock. Higher oil prices are feeding through into transport, logistics and broader goods prices. Westpac expects headline CPI to peak near 5.4% in the June quarter.
- Labour market remains tight. Unemployment has not risen meaningfully, and wage growth has stayed elevated, adding to concerns about second round effects.
Together, these factors made the Board uncomfortable holding at 3.60%. February's hike was the opening move, and March's follow up confirmed the shift into a new tightening cycle.
Impact On Your Home Loan
If you are on a variable rate, your repayments have already risen twice in 2026 (50 basis points total) and will likely rise again in mid May. The panel average owner occupier variable rate across Lendera's 60+ lenders is now 6.14%. If you are above that, a rate review is worth doing before the next hike lands.
If you are considering fixing, fixed rates have already moved higher to embed further expected hikes. The average 2 year fixed for owner occupiers is 6.29% and the average 3 year is 6.45%. Fixing locks in a higher starting point than variable but protects you if the Westpac forecast plays out.
If your fixed term is expiring soon, start comparing now. The revert rate your lender will drop you to is almost certainly higher than what a broker can negotiate. With another hike expected in May, any delay is likely to cost you.
If you are about to buy, stress test your borrowing against at least one more 25 basis point hike, and build a buffer for the Westpac scenario of three more if you want headroom. The sharpest non bank rates on panel start at 5.69%, still below the panel average.
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