Update, October 2026: Since this article was published, the RBA held the cash rate at 4.35% in June and August, then lifted it to 4.60% on 29 September 2026. The figures below reflect the decision at the time. For where rates stand now, read our RBA interest rate outlook.

The Reserve Bank of Australia raised the official cash rate by 0.25% on 5 May 2026, lifting it to 4.35%. It is the third consecutive increase this year, following hikes in February and March. If you have a variable rate home loan, your repayments are about to go up again.

What the RBA decided

The RBA Board voted to increase the cash rate target from 4.10% to 4.35%. The three hikes in 2026 have together added 0.75% to the cash rate since January, when it sat at 3.60%.

Most lenders pass rate increases on in full within one to two weeks of the RBA announcement. If your lender follows suit, your variable rate will rise by 0.25% from mid-May.

What this means for your repayments

The dollar impact depends on your loan size. Here is a rough guide based on a standard principal and interest loan over 30 years:

  • $500,000 loan: roughly $80 more per month from this hike alone
  • $700,000 loan: roughly $110 more per month from this hike alone
  • $1,000,000 loan: roughly $155 more per month from this hike alone

Across all three 2026 hikes, a borrower with a $700,000 loan is now paying around $295 more per month than they were at the start of the year. That is over $3,500 more per year.

If you have not reviewed your rate recently, you may be feeling the combined weight of multiple increases. This is the moment to check whether your current rate still makes sense.

Why the RBA kept hiking

The RBA's primary job is to keep inflation between 2% and 3%. Right now, it is not there. Annual inflation sits at around 4.6%, one of the highest readings in nearly three years.

The Board has signalled it will keep raising rates until it sees inflation moving sustainably back toward the target band. In plain terms: until prices stop rising so fast, borrowing costs are likely to stay elevated.

That said, after three consecutive hikes the RBA has shifted its language. The May statement moved toward a more data-dependent, wait-and-see stance. The Board is watching the numbers closely before deciding whether to go again.

What happens next

The big four banks are split on what comes after May. ANZ, CBA, and NAB are not forecasting any further hikes in 2026. Westpac is the outlier, predicting two more increases in June and August that would take the cash rate to 4.85%.

Nobody knows for certain. The next RBA meeting is in June, and the data between now and then, particularly the next inflation reading, will carry a lot of weight.

What is clear is that rates are higher than they were, and higher than many borrowers planned for when they took out their loan. If your buffer is getting thin, now is a good time to act rather than wait.

What you should do right now

The single most useful thing you can do today is find out what rate you are actually on. Pull up your last loan statement or log in to your bank app and look for the interest rate on your home loan.

Then ask: is this competitive for where the market sits right now?

Your bank will not call you to offer a better deal. They price new customers more aggressively than existing ones. If you have been with the same lender for two or more years and have not reviewed your rate, there is a reasonable chance you are paying more than you need to.

A broker can check your rate against the current market in a short conversation, at no cost to you. If your rate is competitive, we will tell you. If it is not, we will show you what a better deal looks like and what it would take to get there.

This is not about chasing the lowest number on a comparison website. It is about making sure your loan still fits your situation, at a price that reflects what you are worth as a borrower.

If the May rate rise has you wondering whether you are on the right loan, book a free call with Matt or Jess. We will check your rate, walk you through your options, and give you a straight answer, no obligation.