The latest RBA cash rate rise has delivered a fresh hit to Australian mortgage holders, with the Reserve Bank of Australia lifting the official cash rate by 25 basis points to 3.85%. For homeowners with variable loans, this move could mean higher monthly repayments and more pressure on already stretched household budgets.
In this article, we break down why the RBA cash rate rise happened, how it may affect your mortgage, and what practical steps you can take right now to stay in control of your home loan.
Why the RBA Cash Rate Rise Happened in 2026
The RBA cash rate rise comes after new inflation data showed price pressures are picking up again across the Australian economy. According to the Australian Bureau of Statistics, inflation rose to 3.8% in the year to December 2025, moving further away from the RBA’s target range of 2–3%.
While inflation had previously eased from its 2022 peak, the Reserve Bank noted that:
- Consumer demand is stronger than expected
- Businesses are facing ongoing capacity pressures
- The labour market remains tight
In its monetary policy statement, the RBA indicated that inflation could remain above target for some time. As a result, the Board decided that another RBA cash rate rise was necessary to slow spending and reduce inflationary pressure.
In simple terms: when inflation climbs, the RBA often increases interest rates to cool the economy. Unfortunately, that also means higher borrowing costs for households with mortgages.
How the RBA Cash Rate Rise Affects Mortgage Repayments
If you’re on a variable home loan, your lender will likely pass on some or all of this RBA cash rate rise. Even a small increase can add up significantly over time.
Here’s what a 25 basis point rise could mean for typical loan sizes (principal and interest, 25-year term):
| Loan Amount | Estimated Monthly Increase | Estimated Annual Increase |
|---|---|---|
| $500,000 | +$77 per month | +$924 per year |
| $750,000 | +$115 per month | +$1,380 per year |
| $1,000,000 | +$154 per month | +$1,848 per year |
These figures assume your lender passes on the full rate increase. Some lenders may delay or partially pass on the change, but many will adjust rates in line with the RBA cash rate rise.
What if your repayments don’t change?
Interestingly, not every borrower will see their minimum repayment increase immediately.
When rates fell from the recent peak of 4.35% during 2025, many lenders kept repayments the same. Instead of lowering your monthly amount, they used the extra money to reduce your loan principal faster.
If that’s your situation, this RBA cash rate rise may not change your repayment figure but a larger portion of your payment will now go toward interest rather than paying down your loan balance. That can slow your progress toward becoming debt-free.
The Real Impact of the RBA Cash Rate Rise on Households
Beyond the numbers, the emotional and practical impact of a RBA cash rate rise can be significant.
For many Australian families, mortgage repayments are already one of the largest household expenses. Higher interest rates can lead to:
- Less disposable income
- Reduced savings
- Difficulty managing other debts
- Delayed financial goals like renovations, travel, or investing
When repayments increase, even by what seems like a small amount, it often means cutting back in other areas. Over time, repeated RBA cash rate rises can create real financial stress especially for households that stretched their borrowing capacity when rates were lower.
A RBA cash rate rise doesn’t mean you have to simply accept higher costs without exploring your options.
Now is the perfect time to review your home loan.
You may be able to:
- Negotiate a better rate with your current lender
- Refinance to a more competitive loan
- Consolidate debts to improve cash flow
A quick review could potentially save you thousands over the life of your loan especially in a rising rate environment.
Can You Protect Yourself from Future RBA Cash Rate Rises?
While no one can control RBA decisions, there are strategies that can help reduce the impact of future RBA cash rate rises.
1. Build a buffer
If possible, keep extra funds in an offset or redraw facility. This reduces the interest charged and gives you breathing room if repayments increase again.
2. Consider fixing part of your loan
Some borrowers choose to split their loan — part fixed, part variable. This can provide some stability while still allowing flexibility.
3. Make extra repayments when you can
Paying extra during lower-rate periods can reduce your principal faster, which helps soften the blow when the next RBA cash rate rise comes along.
4. Regularly review your loan
Many borrowers stay on uncompetitive rates simply because they haven’t reviewed their mortgage in years. In a changing rate cycle, regular check-ins are crucial.
Why Speaking to a Mortgage Broker Matters Right Now
When the RBA cash rate rise hits, lenders adjust rates at different speeds and by different amounts. Some may offer retention discounts to keep customers, while others quietly move rates higher.
A mortgage broker can:
- Compare options across multiple lenders
- Negotiate on your behalf
- Help you understand the true cost of switching
- Structure your loan to suit your goals and cash flow
Every household’s situation is different. The right strategy for one borrower may not work for another, which is why tailored advice is so important after an RBA cash rate rise.
The move to lift the cash rate to 3.85% is a clear sign the fight against inflation isn’t over. For mortgage holders, this RBA cash rate rise may mean higher repayments, tighter budgets, and a need to reassess financial plans.
But it’s not all bad news. Rising rate periods are also when proactive borrowers can make smart changes that improve their loan structure, reduce interest costs, and strengthen their long-term position.
Feeling the pressure from the RBA cash rate rise? You don’t have to navigate it alone.
Let’s review your home loan and see if there’s a smarter way forward.
Whether it’s negotiating with your current lender, refinancing, or restructuring your debt, we’re here to help you make confident, informed decisions.
Get in touch today for a personalised home loan review.
Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Connect with Louisa on Linkedin.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
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