The RBA has lifted the official cash rate for a third consecutive board meeting, adding further pressure on Sydney mortgage holders.
Today, Martin Place increased the rate by 0.25%, taking the official cash rate back up to 4.35%, with a vote of eight to one in favour from the board. The move continues a sharp shift from when the cash rate sat at 3.60% in January. However, this was before geopolitical tensions and supply chain disruptions began to feed into inflation.
Headline inflation has rocketed up to 4.60%, while the underlying rate (in a modicum of good news) held steady at 3.30%. It was this underlying rate that had some experts calling for a pause today. It wasn’t to be.
‘The conflict in the Middle East has resulted in sharply higher fuel and related commodity prices, which are already adding to inflation,’ said the RBA. ‘There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen.’
The latest increase has reversed last year’s relief, when borrowers benefited from three rate cuts in 2025. After today, a homeowner with a $600,000 mortgage will likely pay about $91 more per month, according to Canstar. Across 2026, three rate rises mean repayments will have increased by around $272 a month, or roughly $3,264 a year. A borrower with an $800,000 mortgage may face an additional $122 per month, or $4,356 annually.
The Big Four banks expected a rise today, or as one economist dubbed it, a ‘Hormuz hike’. What’s more, Deputy Governor Andrew Hauser signalled the likelihood of today’s increase in a speech last month. He described the outlook as a ‘central banker’s nightmare’, fuelling speculation that further rate hikes may be needed to drag inflation back to the RBA’s 2–3% target range.
‘Higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly,’ added the RBA today. ‘This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy.’
Meanwhile, Canstar also reports that five lenders recently increased 30 variable rates for owner-occupiers and investors by an average of 0.23 percentage points. A further 13 lenders lifted 261 fixed rates by an average of 0.26 percentage points, signalling that borrowing costs are likely to remain elevated in the near term.
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!