Mortgage stress is back on the rise, and this time it’s not creeping. With another rate decision looming, borrowers across Australia are bracing for impact.
Mortgage Costs Could Jump With the Next Rate Move
If you were planning to lock in a mortgage under 5%, you might already be too late. With the Reserve Bank of Australia (RBA) expected to lift the cash rate to 3.85%, lenders are quickly adjusting. According to Canstar, only six lenders now offer fixed rates below that threshold — and even those could vanish overnight.
A modest-sounding 0.25% increase might not seem like much, but for a $1 million mortgage, it translates to around $150 more per month, or $1,800 a year. For families already stretched thin, that’s not spare change — it’s groceries, petrol, or school fees.
From Rate Cuts to Rate Hikes: What Just Happened?
Not long ago, the market was predicting rate cuts. Two of them, in fact. Now? Two increases by the end of 2026. The shift has been abrupt. Rising inflation has forced both the RBA and lenders to rethink — and act fast, explains Yahoo Finance.
Since the RBA’s last meeting in December, more than 60 lenders have already bumped up at least one of their fixed rates. It’s not panic, exactly — but it’s clearly a reaction to changing expectations. The window to grab a “cheap” loan may have officially closed.
Is a Hike Inevitable?
Not everyone is convinced it’s a done deal. Luci Ellis, chief economist at Westpac and former assistant governor at the RBA, has suggested the board might wait. Inflation data, while still high, isn’t moving further from target — and the new monthly measures from the ABS have added noise to the numbers.
But Paul Bloxham, chief economist at HSBC, says the RBA should have held rates higher for longer. He argues the bank made two flawed assumptions: that productivity growth would cushion inflation, and that government spending wouldn’t blow out. But spending did blow out — by 1.7% of GDP more than forecast, according to December’s fiscal update.
What It Means for Everyday Borrowers
For Australians with mortgages, it’s another layer of uncertainty. The cost of living is already biting hard, and many are juggling bills, groceries, childcare, and now — potentially — hundreds more in monthly repayments.
There’s no crisis yet. But there’s tension. And with the next rate decision just days away, the message for borrowers is clear: act fast or brace for more.
