All Four Major Banks Now Expect Another RBA Rate Hike
With the cash rate at 4.35% and markets pricing a 54% chance of a September move, here's what borrowers need to do now.
Australia's official cash rate has already risen three times in 2026, reaching 4.35%. Now, for the first time, every one of Australia's Big Four banks is officially forecasting at least one more increase before year's end — and financial markets are giving a 54% chance of it happening as soon as this month.
The RBA's next scheduled meeting is 28 and 29 September. What happens there will matter to every Australian with a mortgage.
What the RBA Is Actually Saying
On ABC's 7.30, RBA Deputy Governor Andrew Hauser laid out the central bank's position without much ambiguity: "There's a lot to like about the Australian economy. But we have one big problem and that's inflation. Inflation is too high, and that's why we raised interest rates three times at the beginning of this year. And the question now, frankly, for us, is have we done enough, or is more needed?"
That question — have we done enough — is the one every mortgage holder in Australia wants answered. The inflation data suggests the RBA isn't satisfied yet.
Headline CPI for the 12 months to July came in at 3.5%, down slightly from 3.8% the month before. Trimmed mean inflation — the RBA's preferred measure, which strips out volatile price movements — held at 3.6%, unchanged from June. Both figures sit above the RBA's target band of 2% to 3%, and the bank has been consistent: it will not consider easing until inflation is back within that range.
RBA Governor Michele Bullock signalled the same position after the August meeting, saying the bank would consider raising rates again "if that is what is required to bring inflation down in a timely way." That "if" is doing less work than it used to.
Markets and the Major Banks Are Now Aligned
By the last week of August, futures markets were already pricing in a 40% probability of a rate rise at the September meeting. By the first week of September, that had climbed to 54%. If the RBA holds in September, markets are pricing a 97% chance of a move by November.
For most of this year, the major banks had been split. After the July CPI figures — released in August — three of the Big Four were forecasting further tightening. Westpac held out as the exception. This week, Westpac officially revised its position and is now forecasting a 25 basis point increase at the November meeting.
That means all four major banks are now in the same camp: higher rates are coming.
Macquarie Bank sits at the more aggressive end of forecasts, tipping a move at the September meeting itself rather than waiting until November.
As Australian Broker reports, this convergence reflects a significant shift in how the financial sector is reading the RBA's intentions.
Three Risks Keeping the RBA Up at Night
Deputy Governor Hauser specifically identified three factors that could force further rate increases beyond current expectations:
**Geopolitical instability in the Middle East.** Ongoing conflict adds uncertainty to global energy and supply chains — both of which flow directly into Australian consumer prices. This risk hasn't gone away.
**AI-driven global growth.** The rapid global investment boom in artificial intelligence is generating surging demand for energy, data centre capacity and specialised labour. That demand is putting upward pressure on costs across economies already running hot.
**Australia's domestic capacity constraints.** The Australian economy is struggling to produce enough goods and services to meet current demand without prices rising. That structural imbalance is a core reason inflation has remained sticky despite three rate hikes.
"We're very focused on those upside risks to inflation," Hauser said.
For borrowers, these aren't abstract macroeconomic observations — they're the reasons why the RBA may need to keep going even if inflation data shows modest improvement month to month.
What This Means for Your Mortgage
A further 25 basis point increase would mean higher monthly repayments for every borrower on a variable rate. After absorbing three rate increases already in 2026, many households are already feeling the pressure. Another hike adds to that load without any immediate prospect of relief on the horizon.
Beyond repayment pressure, further rate hikes also compress borrowing capacity. Every increase in the cash rate reduces what lenders will approve, which has a direct effect on how much buyers can offer and whether refinancing into a larger loan makes sense. Use the borrowing power calculator to see how your position has shifted since the first hike of the year.
For anyone still in their original home loan from two or three years ago, this is a natural moment to check whether the rate you're paying still reflects what's available in the market. Rates have moved significantly, and loyalty doesn't always pay on a mortgage. The refinance savings calculator gives a quick sense of what switching could mean in monthly and annual dollar terms.
If you want to compare current options directly, cheapest home loans lists what's available across the market right now.
Timing Matters: The Window Before 28 September
The RBA meets in just a few weeks. Whether the outcome is a 25 basis point increase or a hold, the signal from both the central bank and every major lender is that the rate environment is more likely to tighten than ease over the months ahead.
That creates a short but practical window. Refinancing decisions, fixed-rate conversations and loan review appointments that were being deferred are now worth moving on before a September hike reprices the market again.
For first home buyers, rate hikes create real affordability constraints — but they've also begun to weigh on dwelling values, which may create some negotiating room in certain markets. It's worth modelling your position carefully. Browse first home buyer home loans to see what's on offer and consider running your numbers through the repayment calculator before making any commitment.
Investors face a particular squeeze: higher rates compress yield margins and reduce cash flow, especially for those who bought at higher price points in recent years. Investor home loans shows what competitive rates currently look like across that segment.
The RBA is watching inflation closely between now and the 28th. Borrowers would do well to watch their rate just as carefully.