RBA March 2026: Could Another Rate Hike Be Coming?
A Rate Rise Is “Live” for March
Reserve Bank Governor Michele Bullock made it clear at the AFR Business Summit in early March: a rate hike at the upcoming 16-17 March meeting is very much on the table. Bond traders have responded, pushing the probability of a March increase to around 33%.
This caught many off guard. Most economists had expected the RBA to wait for the next quarterly inflation report before acting, with May seen as the more likely meeting for any move. But the rapid escalation in oil prices following the Iran conflict has changed the calculation.
Why Oil Prices Matter for Your Mortgage
The link between oil prices and interest rates isn’t always obvious, but it’s straightforward:
- Higher oil prices push up petrol costs. Every US$10 rise in oil roughly translates to a 10 cent per litre increase at the pump.
- Higher fuel costs feed into inflation. Transport costs affect the price of almost everything, from groceries to construction materials.
- Higher inflation means tighter monetary policy. If the RBA sees inflation moving further from its 2-3% target, it has to respond.
Commonwealth Bank’s head of Australian economics estimates that the oil price jump, if sustained, would add 0.1 percentage points to inflation per quarter. That doesn’t sound like much, but when the RBA is already fighting sticky inflation, every fraction counts.
What a Rate Hike Would Mean for Borrowers
If the RBA lifts the cash rate by 0.25%, here’s what it means in dollar terms:
| Mortgage Size | Monthly Increase | Annual Increase |
|---|---|---|
| $400,000 | ~$63 | ~$756 |
| $600,000 | ~$95 | ~$1,140 |
| $800,000 | ~$126 | ~$1,512 |
| $1,000,000 | ~$158 | ~$1,896 |
Based on a 25-year variable rate loan.
For households already stretched by previous rate rises, even a modest increase adds pressure. And if May brings another hike, as some economists warn, the cumulative effect becomes more significant.
Three Things Borrowers Should Do Now
1. Check Your Rate
If you haven’t reviewed your mortgage rate in the last 6 months, now is the time. Lenders are competing hard for refinance business, and the difference between your current rate and the best available could be substantial. A mortgage broker can run a comparison across multiple lenders in minutes.
2. Stress-Test Your Budget
Assume rates go up by 0.50% over the next 6 months. Can your household budget absorb the extra $190 per month on a $600,000 loan? If the answer is “barely,” consider what discretionary spending you can trim now rather than being forced to later.
3. Consider Fixing a Portion
While variable rates give you flexibility, locking in a portion of your loan at a fixed rate can provide certainty on repayments. This is especially worth considering if your budget is tight and you’re worried about multiple rate rises. Talk to your broker about a split loan structure.
The Bigger Picture
Even if March passes without a hike, the direction is clear: the RBA is watching inflation closely and won’t hesitate to act if needed. The Iran conflict and its impact on global oil supply adds a layer of uncertainty that didn’t exist three months ago.
For borrowers, the key takeaway is simple: don’t wait to get your finances in order. Whether rates move in March or May, being prepared puts you in a stronger position either way.
Need Help With Your Mortgage?
If you’re unsure whether your current loan is still competitive, or you want to understand your options before rates move, a mortgage broker can help you navigate the choices. Find a mortgage broker near you on WealthWorks.
Frequently Asked Questions
When is the next RBA interest rate decision?
The RBA board meets on 16-17 March 2026, with the decision announced at 2:30pm AEDT on Tuesday 17 March.
How much could my mortgage repayments increase?
A standard 0.25% rate hike on a $600,000 mortgage would add roughly $95 to monthly repayments, or around $1,140 per year.
Why is the RBA considering another rate rise?
Rising oil prices from the Iran conflict are pushing up inflation expectations. The RBA is concerned about a prolonged supply shock making it harder to bring inflation back to target.
