RBA governor Michele Bullock is set to host a feisty monetary policy meeting Tuesday. Picture: John Feder/The Australian.
The Reserve Bank is set to throw a one-two punch to borrowers today with back-to-back hikes – but several experts warn “now is no time to increase rates” with households crushed by rising costs.
This as a 0.25 percentage point hike to the cash rate target is widely expected from the Reserve Bank monetary policy board meeting today, which would push the average owner-occupier variable rate through the 6 per cent ceiling again for the first time since April last year (6.01 per cent).
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The average $736,259 home loan will jump to $4,410 per month if the full rate rise is passed on by lenders today, according to Finder – which amounts to $2,805 more a year.
Ten days ago, Aussie mortgage holders were confidently absorbing February’s 0.25 percentage point rise without issue, with most experts predicting rates wouldn’t move again until May.
Then the fallout of the US-Israeli war with Iran began to hit home and by March 13, the odds swung dramatically to a 71 per cent expectation of a hike today across the wider market.
The ASX 30 Day Interbank Cash Rate Futures March 2026 contract was trading at 96.07 on Friday, indicating expectations RBA will hike to 4.1 per cent.
For a typical Australian family with a $600,000 mortgage, the total monthly damage will hit $181 off February and March rate hikes alone, according to Canstar.com.au figures.
For those with a $700,000 loan, the numbers are even more confronting, with March alone set to add $106 more monthly and the cumulative rise sitting at $211.
Finder’s data showed repayments for the average $736,259 home loan will jump to $4,410 per month if the full rate rise is passed on by lenders today – which amounts to $2,805 more a year for interest costs compared to January’s situation.
Mortgage repayments on average home loan of $736,259. Source: Finder.
Finder head of consumer research Graham Cooke said “between the volatility in the Middle East pushing up fuel prices and the RBA’s need to rein in inflation, it’s a high-stakes guessing game for everyone”.
“There’s no meeting in April so the board may be moved to act now. A rate hike would put immense pressure on household budgets that are already stretched thin.”
But despite the big four banks all positioning for a hike, Finder’s expert panel of 37 economists told a different story on Friday with 62 per cent predicting a hold and only 38 per cent a hike.
Queensland University of Technology adjunct professor Noel Whittaker was among those urging caution by the RBA today.
“This is no time for the Reserve Bank to be raising interest rates. There’s no point making Australian householders pay more on their mortgage to combat inflation that is not of this country’s making,” he warned. “The prudent course would be to hold rates steady and wait until at least the next meeting to see how events unfold.”
Leanne Pilkington from Laing+Simmons agreed, saying the war in the Middle East was impacting oil prices in the immediate term but had the potential to cause economic damage too.
“We think the sensible path is to hold rates steady until a clearer picture emerges.”
Graham Cooke, head of consumer research at Finder, said there’s no monetary policy meeting in April so the RBA board may be moved to act now.
Canstar’s data insights director, Sally Tindall, said “consumer confidence has been rattled by global events with some households already making adjustments in anticipation of tougher times ahead”.
“The RBA could decide to wait for a clearer read on the overarching impact of the war in the Middle East on the Australian economy before it makes a move. There will no doubt be robust debate in the room. It could well be one of the rare meetings that results in a split decision.”
Banks have not been sitting around waiting to see what happens, with 27 lenders already increasing at least one fixed rate ahead of the RBA Board meeting.
Canstar data insights director Sally Tindall urged borrowers to give themselves their own rate cut by shopping around for a better deal or asking their lender for one.
AMP Bank’s chief economist Shane Oliver was among those who believe a rise is inevitable given energy price surges, as does My Housing Market chief economist Dr Andrew Wilson who said the “latest RBA narrative indicates higher interest rates in the face of high and rising inflation – with the oil wildcard now in play”.
Ms Tindall urged borrowers to outsmart any rises by stating their case with their lender – “negotiating even a small discount” or, failing that, refinancing to a better deal to cancel out the rate hike impact.
Impact of a 0.25 hike in March on monthly repayments. Source: Canstar.com.au
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