Here we go again. The RBA applied the monetary policy brakes to spending by lifting the official cash rate back up to 3.85% today.
The RBA has returned to tightening mode, hiking the official cash rate by 25 basis points at its first monetary policy meeting of 2026.
The Central Bank explained what is likely bad news for many Sydney home loan mortgage holders, adding that it believed inflation will remain above the target range for a while longer.
‘A wide range of data over recent months have confirmed that inflationary pressures picked up materially in the second half of 2025. While part of the pick-up in inflation is assessed to reflect temporary factors, it is evident that private demand is growing more quickly than expected,’ the RBA noted after delivering the disappointing news for many in Sydney.
Today was the first RBA official rate rise in just over two years.
After the relief of 2025, which saw mortgage borrowers enjoy three rate cuts by August, inflation concerns have reared once again and repayment costs are set to rise again – around $90-$150 a month, depending on the type and amount of the loan.
The stats show that annual CPI inflation rose to 3.8% in December 2025, up from 3.4% in November. Additionally, underlying inflation (which strips out volatile items) also ticked up, with the trimmed mean rising to 3.3% from 3.2% the month before.
As a result, inflation is above the RBA’s preferred 2–3% target range, where it has been since September last year. So, looking at this trend, today’s news may not be a huge surprise.
That said, some market watchers had predicted that global instability (Greenland, Venezuela and global tariffs) had clouded the global economic outlook, with a pause in RBA rates more applicable right now.
Historically, it’s rare for back-to-back cuts or increases so a pause can reasonably be expected on 17 March when the RBA board next meets. But who knows about May. Some industry experts have tipped a second increase this year.
‘The Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decision,’ added the board from its Martin Place HQ.
Clearly, the lenders sensed the mood at the RBA before today. Data from rate tracking site Canstar reveal that 34 lenders have hiked at least one fixed-rate offering since the last RBA monetary policy announcement on 10 December.
If you are considering reviewing your current arrangements, reach out to Mortgage Broker Sydney.
Our friendly brokers can meet you wherever is most convenient: your home, office, or a local cafe.
In addition, we are here to guide you on various strategies such as uncovering lower rates, enhancing savings, consolidating debts, and alleviating the impact of rising household prices.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!