RBA Back at 4.35%: How the Rate Reversal Hits Your Mortgage

After three cuts in 2025 took the cash rate to 3.60%, the RBA has hiked back to 4.35% in 2026. Here's what the full cycle means for your home loan.

The Reserve Bank of Australia moved decisively through 2025. Three rate cuts — in February, May, and August — took the cash rate from 4.35% down to 3.60%, releasing pent-up borrower demand and driving mortgage activity to record levels.

Then the RBA reversed course. Three hikes in February, March, and May 2026 returned the cash rate to 4.35%, fully reversing all of the previous year's easing in the space of four months.

MPA Australia's verified data from its 2026 Top Brokerages report places that rate cycle in sharp context, and the numbers have direct implications for every borrower carrying a variable rate home loan in Australia today.

What the Rate Reversal Means in Dollar Terms

The average owner-occupier mortgage reached $735,000 in March 2026, rising more than $75,000 on the same month the previous year, according to ABS Lending Indicators released on 13 May 2026. In New South Wales, the average is $860,000. The national median dwelling value sat at $922,838 in late February 2026, up 9.9% year on year, according to Cotality's Home Value Index.

At those loan sizes, the full 0.75 percentage point reversal of the 2025 rate cuts translates to around $5,500 in additional annual interest on the $735,000 national average loan, compared with where rates sat at the 3.60% trough in August 2025. On a NSW-average loan of $860,000, the equivalent figure is around $6,450 a year.

The ABS lending data is already reflecting the squeeze. Total new home loan commitments fell 3.8% in the March 2026 quarter to $103 billion — the first meaningful pullback after the strong 2025 recovery. New investor loan commitments fell 5.3% over the same period.

Why Broker Market Share Has Never Been Higher

One constant through both the easing and tightening phases: borrowers are turning to brokers in larger numbers than ever before. Mortgage brokers facilitated 76.7% of all new residential home loans in the December 2025 quarter, the highest December market share on record since the Mortgage and Finance Association of Australia (MFAA) began tracking quarterly data in 2013, according to MFAA data compiled by Cotality. The peak was 77.6% in June 2025.

In value terms, brokers settled $142.2 billion in new home loans in the December 2025 quarter alone, up 23.6% on the same period in 2024.

MFAA CEO Anja Pannek says the trend reflects something structural rather than cyclical. "Borrowers are increasingly seeking out brokers because they value choice, expert guidance and the support they receive. We see this happening, regardless of where we are in the economic cycle," she said.

When the cash rate is moving up and down by 0.75 percentage points within a 12-month span, knowing which lender to approach, which product suits your income structure, and when a fixed rate provides genuine value versus a variable — these are not questions with obvious answers. That complexity drives borrowers toward independent guidance.

What Borrowers Should Be Doing Right Now

For existing variable rate borrowers, the immediate question is whether their current rate is competitive or simply the default rate their lender applied after the cycle moved. A 0.5% gap between your current rate and the [cheapest home loans](/home-loans/cheapest) available in the market is worth $3,675 a year on the $735,000 national average loan. On a $860,000 loan, that gap costs over $4,300 annually.

If you haven't reviewed your rate since before the 2025 cuts, or since the 2026 hikes came through, use our [refinance savings calculator](/calculators/refinance-savings) to get a quick read on whether the numbers justify a switch.

For borrowers entering the market — whether first home buyers or investors — the March 2026 data confirms what higher rates do to volumes. Lenders respond to softer application numbers by sharpening product pricing, and the most competitive rates are often available in exactly these periods. Use our [repayment calculator](/calculators/repayment) to sense-check what a loan structure actually costs at today's rates, and our [borrowing power calculator](/calculators/borrowing-power) to understand your capacity before you start comparing properties.

First home buyers in particular face a tighter affordability environment than at any point since the post-COVID peak. Getting clear on what you can realistically borrow — and which lenders currently have appetite for your profile — is the work to do now.

[MPA Australia's 2026 Top Brokerages report is available here.](https://www.mpamag.com/au/best-in-mortgage/best-mortgage-brokerages-in-australia-the-2026-top-50-ranked/580078)