Third RBA Rate Hike in 2026: What Borrowers Should Do

Three in four economists expect the RBA to lift rates again in May — here's what a potential third 2026 rate hike means for your monthly repayments.

RBA Tipped to Raise Rates Again — What the Experts Are Saying

Property Update reports that a monthly panel survey of 36 economists and property experts has found three-quarters expect the Reserve Bank of Australia to raise the cash rate at its upcoming May board meeting. Of the 36 surveyed, 27 — or 75% — are predicting a 25 basis point increase that would take the cash rate from 4.10% to 4.35%.

If confirmed, this would be the third rate hike in the current tightening cycle, following increases in both February and March of 2026.

For Australian borrowers, the cumulative impact is significant. Based on the average Australian home loan of $736,259, a May rate rise would add $233 per month — or $2,657 more per year — to repayments compared to what borrowers were paying at the start of 2026. That is on top of the $1,337 annual increase already absorbed after the February and March hikes.

The key reason most experts are tipping a hike is inflation. Annual CPI came in at 4.6% for the March quarter — well above the RBA's 2–3% target band. Stella Huangfu from the University of Sydney noted that underlying inflation also remains elevated, suggesting price pressures are not simply a fuel-price spike. "This makes a rate increase next week more likely, as the RBA will want to keep inflation expectations anchored," Huangfu said.

Richard Whitten, a home loans expert, framed the stakes plainly: "Another rate rise would take the cash rate back to its 2024 peak, but the economic environment is tougher now. Inflation has continued to rise in that time, meaning Australians are in an even worse position than they were two years ago. While default rates remain low, and the RBA likely believes borrowers can handle a slightly elevated rate, it's hard to imagine rates going much higher without something breaking."

The Case for Holding — A Minority View Worth Knowing

Not all experts agree. Nine of the 36 surveyed — 25% — believe the RBA will hold at its May meeting. The core argument: underlying inflation was unchanged from February at 3.3%, and the spike in headline CPI was driven largely by fuel prices, which the RBA typically looks through when setting policy.

Saul Eslake from Corinna Economic Advisory is in the hold camp, noting that since underlying inflation has not risen further, the RBA "doesn't need to raise rates again in May" and "can afford to wait and see what happens to inflation expectations."

Michael Yardney, founder of Metropole Property Strategists, offered a nuanced view from the hike camp: "The latest CPI figures don't really justify an urgent rate hike, with inflation at 4.6% and coming in below expectations. However, the 0.9% monthly jump, driven largely by fuel costs, will concern the RBA because of the risk these short-term shocks feed into broader inflation expectations."

Yardney also noted the RBA's credibility is a factor in its decision-making: "They're likely to err on the side of being seen as tough, even if another rate rise does little to address the underlying causes of current price pressures. The risk, though, is that they overcorrect just as the economy is slowing, increasing pressure on households."

Should You Fix Your Rate Now?

One of the most practical questions facing borrowers right now is whether to lock in a fixed rate before May. The survey found a near-even split among those who weighed in: 41% said it is too late to fix, 41% said it is not too late, and 18% were unsure.

Whitten's view is that fixing is never really about outsmarting the bank: "Banks are better at predicting rate movements than their customers. It's their business. Right now, the most competitive 1 and 2 year fixed rates are quite similar to the most competitive variable rates. If you think interest rates are likely to rise further this year — and signs suggest they will — then fixing today means protecting yourself from future rate rises. It's about being able to budget more effectively for your repayments."

Shane Oliver from AMP took a more measured line: "It's not the best time as fixed rates have already gone up, but it can still afford some protection if a borrower can't afford any further increase in variable rates."

More than half of the experts tipping a May hike — 52%, or 14 of 27 — also expect a follow-up hike as soon as August this year. A further 26% (seven of 27) are tipping a September move. If these forecasts prove accurate, Australian borrowers could be navigating a sustained period of elevated rates through the second half of 2026.

What You Can Do Right Now

The most useful response to an uncertain rate environment is to understand your own position rather than waiting for the next decision to land.

If you're on a variable rate and haven't reviewed your loan in the past six months, now is a good time to [compare what's available](/home-loans/cheapest) and check your current rate against what lenders are offering new customers. Lenders are still competing for volume, and many borrowers are paying more than they need to.

If you're weighing up whether to fix, use our [repayment calculator](/calculators/repayment) to model what different rates would mean for your monthly budget — especially if a higher rate would push repayments into genuinely uncomfortable territory. And if you're unsure where you stand on borrowing capacity under the current lending environment, our [borrowing power calculator](/calculators/borrowing-power) can help clarify the picture.

The broader takeaway from the survey is clear: rates may stay higher for longer than previously expected. Borrowers who act now — before the next decision is announced — are in a stronger position than those who wait to react.

[Property Update](https://propertyupdate.com.au/3-in-4-experts-predict-another-cash-rate-hike-in-may-new-data-reveals/) has the full expert survey breakdown.