04/02/2026
The Reserve Bank of Australia has lifted the official cash rate by 25 basis points, taking it to 3.85 per cent. The move reflects growing concern that inflation is proving stubborn, with underlying price pressures still sitting above the RBA’s target range of 2 to 3 per cent.
While a quarter of a percentage point may sound small, it can have a noticeable flow-on effect across the property market.
Here’s what it means in practical terms for buyers, sellers, homeowners and renters.
For homeowners with a mortgage:
Most variable-rate borrowers can expect their bank to pass on the full increase.
On a $600,000 mortgage, a 0.25 per cent rise typically adds around $90 to $100 a month in repayments. For households already feeling the pinch from higher living costs, this tightens budgets further. Fixed-rate borrowers will not see an immediate change, but anyone rolling off a fixed rate this year is likely to face higher repayments than they are used to. If you’re interested in discussing whether to fix your rate now, it’s worth contacting a mortgage broker who can guide you through the pros and cons.
“This 0.25% rate rise was widely expected, but it’s still another reminder that the RBA isn’t done yet,” says Shane Petros, from mortgage broker Australian Finance Hub. “Inflation is proving harder to bring under control, and the Bank has made it clear it’s prepared to lean on households to get it back into the target range. For mortgage holders, especially those on variable rates or rolling off fixed loans this year, this will mean higher repayments and tighter cash flow. The key now is being proactive — reviewing loan structures, negotiating rates and making sure borrowers aren’t paying a loyalty tax with their lender.”
For buyers:
Higher interest rates reduce borrowing capacity. Even small increases can shave tens of thousands of dollars off what a bank is willing to lend. This may push some buyers to adjust expectations on price or location, or delay purchasing altogether. That said, buyer demand remains resilient in many cities, particularly in Perth, Brisbane and Darwin, where prices are still rising and competition remains strong. If you’re looking to buy this year, it’s a good idea to contact a mortgage broker to understand your borrowing capacity.
For sellers
Rate hikes can soften buyer sentiment at the margin, especially for highly price-sensitive segments like first home buyers.
However, supply remains tight in many markets, which is helping support prices despite higher rates. Sellers with well-located, well-presented homes are still seeing solid interest, but pricing accurately is becoming more important as affordability constraints bite.
For renters
Interest rate rises do not directly change rents, but they can influence them over time. Some landlords facing higher mortgage costs may seek to pass those costs on where market conditions allow. At the same time, reduced buying activity can keep more people in the rental market for longer, adding pressure in already tight rental markets. The result is that rents may remain elevated, particularly in capital cities with low vacancy rates.
The bottom line
This rate rise is a reminder that inflation remains a challenge and that interest rates may stay higher for longer than many had hoped.
Whether you’re buying, selling, owning or renting, understanding how these changes affect your position can help you make more informed decisions in a shifting market.
