RBA Raises Rates Again: Second 2026 Hike Takes Cash Rate to 4.10% — What It Means for Your Mortgage

What the RBA Decided — and How Close the Vote Was

On Monday 17 March 2026, the Reserve Bank of Australia's Monetary Policy Board raised the official cash rate target by 25 basis points to 4.10 per cent. This was the second rate hike of 2026, following the first in February that lifted the rate from 3.60% to 3.85%.

Critically, the vote was far from unanimous. Five of the nine board members voted to increase rates; four voted to hold. That narrow margin signals ongoing division within the RBA about whether tightening is the right response — and whether the impact on households is being felt sufficiently to justify further moves.

In its official statement, the board said inflation had “picked up materially in the second half of 2025” after falling substantially from its 2022 peak. Capacity pressures appeared to have tightened slightly, and the ongoing Middle East conflict was sustaining elevated fuel prices — a key input for both transport and broader consumer goods.

How We Got Here: The Full Rate Hike History

To understand March 2026, you need the full picture. Australia's cash rate cycle has been one of the most dramatic in a generation:

• May 2022 – November 2023: The RBA hiked 13 times in 18 months, lifting the rate from a historic low of 0.10% to a peak of 4.35%. This was the most aggressive tightening cycle since the early 1990s.
• 2024: The RBA held at 4.35% throughout the year, watching for inflation to fully return to the 2–3% target band.
• February, May, August 2025: Three consecutive 0.25% cuts brought the rate down to 3.60% — giving millions of mortgage holders welcome relief.
• H2 2025: Inflation reversed course. Private demand strengthened, employment stayed tight, and fuel costs surged amid geopolitical instability.
• February 2026: First hike — rate rises to 3.85%.
• March 2026: Second hike — rate now at 4.10%.

How Much More Will You Pay?

The practical question for every mortgage holder is simple: what does this mean for my monthly repayments? The answer depends on your loan size and remaining term, but the numbers are significant.

Based on a standard principal-and-interest loan over 30 years, with variable rates rising from approximately 5.50% (pre-2026, at cash rate 3.60%) to 6.00% (after the March 2026 hike at 4.10%):

P&I repayments, 30-year term. Pre-2026 assumes 5.50% variable rate (cash rate 3.60% + ~1.9% lender margin). Post-March 2026 assumes 6.00% variable (cash rate 4.10% + ~1.9% lender margin). Figures are indicative. Source: RBA, Finder, Canstar.

All Four Big Banks Passed It On in Full

There was no relief from Australia's biggest lenders. All four major banks — Commonwealth Bank, NAB, Westpac, and ANZ — confirmed they would pass on the full 0.25% increase to variable rate home loan customers. The changes take effect on 27 March 2026.

This was widely expected. In the post-GFC era, the big four have consistently passed through RBA rate increases to variable mortgage customers, while being slower to pass on cuts. Smaller lenders and non-bank lenders may respond differently — some may absorb part of the hike to maintain market share, while others will follow the majors.

If you're on a variable rate, your bank will notify you of the rate change and your new minimum repayment. You do not need to take any action unless you want to reassess your loan or negotiate a better rate.

The Long Journey: From $2,793 to $4,413 a Month

The full scale of how much the rate cycle has cost Australian borrowers becomes clear when you look at the journey from the low-rate era to today. For the average mortgage of $736,000 on a 30-year term:

• Pre-2022 (variable ~2.20%): Monthly repayment was approximately $2,793
• Peak November 2023 (variable ~6.55%): Monthly repayment peaked at approximately $4,677
• August 2025 after three cuts (variable ~5.50%): Monthly repayment fell back to approximately $4,180
• After March 2026 hike (variable ~6.00%): Monthly repayment is now approximately $4,413

That means borrowers who bought at the peak of the low-rate era are now paying $1,620 more per month — over $19,400 more per year — than they were in early 2022.

Why Did the RBA Hike Again?

The RBA's reasoning was grounded in three interrelated concerns:

1. Inflation Rebounded in H2 2025

After falling substantially from a peak of 7.8% in late 2022, Australia's inflation rate reversed course in the second half of 2025. The board assessed that some of this reflected genuine capacity pressures — the economy had grown faster than expected, with business investment exceeding forecasts even as household consumption disappointed.

2. Middle East Conflict and Fuel Prices

Geopolitical instability in the Middle East continued to support elevated fuel prices, which flow through into goods prices, transport costs, and ultimately the consumer price index. The board cited this as a material upside risk to inflation that could “sustain elevated fuel prices” for longer than the cuts cycle had assumed.

3. A Tight Labour Market

The unemployment rate ran below expectations, and labour underutilisation remained low. While this is positive for household incomes, it also signals upward pressure on wages — which the RBA views as a potential second-round inflation risk if businesses pass higher labour costs onto consumers.

What Should Borrowers Do Now?

Rate hikes are stressful, but they also create opportunities for smart borrowers to act. Here are the most important steps to consider:

Review Your Current Rate

With the cash rate at 4.10%, variable rates from the major banks are now typically 6.00–6.34%. But the market is competitive. Many smaller lenders and non-banks are still offering rates below 5.80%. A mortgage broker can search the market and identify whether you're paying more than you need to.

Consider Fixing Part of Your Loan

The RBA's decision was split 5-4. The board is clearly not committed to further hikes — but also not ruling them out. Fixing a portion of your loan (for example, splitting 50% fixed / 50% variable) can provide certainty on repayments while keeping flexibility if rates fall.

Make Extra Repayments While You Can

If you have an offset account or redraw facility, using any surplus cash to reduce your principal balance will directly reduce the interest you're charged — regardless of what the rate does next.

Talk to Your Lender About Hardship

If the combined impact of the two 2026 hikes is creating genuine financial hardship, Australian lenders are legally required to consider hardship applications. This can include temporary interest-only periods, repayment deferrals, or loan restructuring. Contact your lender before you miss a payment.

What Happens Next? Are More Hikes Coming?

The close 5-4 vote makes the RBA's next move genuinely uncertain. The board has signalled it will monitor global developments, domestic demand trends, inflation outcomes, and the labour market before making any further decisions.

Key factors that could trigger a third hike:

• Inflation remaining above the 2–3% target band into Q2 2026
• Further Middle East escalation driving sustained fuel price increases
• Employment and wages data showing continued labour market tightness

Key factors that could lead to a hold or cut:

• Consumer spending slowing more sharply than expected as mortgage stress bites
• Inflation easing back toward 3% or below on the next CPI print
• Global central banks (Fed, ECB, BoE) cutting rates, reducing pressure on the AUD

Several major bank economists now forecast the cash rate could peak at 4.10% — meaning the March hike may be the last of this cycle. But with the RBA meeting again in May, the data over the next six weeks will be decisive.

Key Data at a Glance