Mortgage customers across the country are bracing for further rate pain, with all four banks expecting another 0.25 hike at the end of the RBA Board meeting tomorrow.
For someone with a $600,000 mortgage and 25 years remaining, this would translate into a $91 increase in their minimum monthly repayments.
Across what would then be two back-to-back hikes, the total increase would be $181 a month.
Impact of a 0.25 hike in March on monthly repayments | ||
|---|---|---|
Debt owing | Hike in March | Cumulative increase (Feb + March) |
$500,000 | +$76 | +$151 |
$600,000 | +$91 | +$181 |
$700,000 | +$106 | +$211 |
$800,000 | +$121 | +$241 |
$900,000 | +$136 | +$271 |
$1 million | +$151 | +$301 |
Source: Canstar. Notes: based on an owner-occupier paying principal and interest with 25 years remaining in Feb 2026 at the RBA avg variable rate. Calculations assume banks pass on the hikes the month after. Changes are to minimum repayments.
Banks already factoring in a hike in March
Rate tracking by Canstar shows in the past two weeks, 27 lenders have hiked at least one fixed rate ahead of Tuesday’s RBA Board meeting as they move to factor in higher borrowing expenses.
On the savings front, 41 banks have increased at least one term deposit rate, as banks recalculate the possibility for higher deposit costs.
Providers moving rates in the last fortnight | |
|---|---|
Number of providers | |
Fixed rate mortgages | 27 |
Term deposits | 41 |
Source: Canstar. Excludes green loans.
What would a competitive rate look like after a March hike?
A 0.25 percentage point hike tomorrow would push the average owner-occupier variable rate into the 6s to an estimated 6.01%. This would be the first time this average was above 5 per cent since April 2025.
A competitive rate is likely to sit at 5.75% or less, with more than 40 lenders offering at least one owner-occupier rate under this mark, while the lowest variable rate is likely to land at or just below 5.50%.
Estimated owner-occupier variable rates if the cash rate rises to 4.10% | |
|---|---|
Average | 6.01% |
Competitive | 5.75% |
Lowest | 5.50% |
Source: Canstar. Note: rates are estimates based on Canstar and RBA data. Assumes cash rate rises in March by 0.25%-points. Rates may vary depending on lender decisions.
Estimated investor variable rates if the cash rate rises to 4.10% | |
|---|---|
Average | 6.25% |
Competitive | 5.90% |
Lowest | 5.70% |
Source: Canstar. See notes above.
What did the banks do after the last hike?
Rate tracking by Canstar found after the last hike, the vast majority of lenders passed on the hike in full within two weeks of the announcement.
However, while banks are quick to charge customers higher rates, there is typically a one to three month delay before they have to make higher repayments.
For example, in the event of a rate hike, the big four banks provide their customers with the following:
- CBA: a minimum of 20 days’ notice.
- Westpac, NAB, ANZ: a minimum of 30 days’ notice.
Even then, it will also depend on when the bank sends out the notification and where customers are in their billing cycle. As a result, many borrowers have not yet seen their minimum repayments rise following the February hike.
What should borrowers do?
- Do the maths: Understand how much your mortgage repayments would be after a hike in March but also another hike in the months ahead. Make sure you can clear both figures.
- Haggle for a lower rate: Ask your bank for a rate review. A reduction of 0.25 will cancel out one hike. A reduction of 0.50 will counteract two.
- Consider refinancing: This involves more paperwork and switch fees but will potentially unlock more competitive rates than haggling with your current bank.
- Understand both sides to fixing: Fixing will protect borrowers against further hikes but it also rules out possible cuts, which could be on the cards if the economy and jobs market are badly impacted by the war. Fixed loans also come with more rules and restrictions.
- Canvas hardship options: If your budget is under extreme pressure and you’ve already tried negotiating a lower rate, ask your bank about alternative relief measures. Make sure you get independent financial advice before you make any big decisions.
- Don’t stop at just the mortgage: Apply the same rigour to your other regular expenses, including electricity, mobile phone, internet and insurances.
Canstar’s data insights director, Sally Tindall, says, “Borrowers across the country are bracing for further mortgage pain, with the Governor confirming the discussion around another cash rate hike will be a live one.”
“Inflation is sitting well beyond the RBA’s target of 2.5 per cent, with rising petrol prices likely to push it even higher, at least in the short term. The Board won’t hesitate to ratchet up the cash rate if it thinks the economy and the jobs market can withstand the extra pressure.
“However, a rate hike is not yet a done deal. Consumer confidence has been rattled by global events with some households already making adjustments in anticipation of tougher times ahead.
“The RBA could decide to wait for a clearer read on the overarching impact of the war in the Middle East on the Australian economy before it makes a move.
"There will no doubt be robust debate in the room. It could well be one of the rare meetings that results in a split decision.
“If the central bank does push ahead with a hike, a typical borrower with a $600,000 mortgage will see around $91 added to their monthly repayments. Combined with the February hike, that’s a total of $181 more every month, with the potential of more hikes to come.
“This won’t be just a double whammy for these households, but rather a barrage of higher expenses with rising petrol prices, higher grocery bills and increases to costs like health insurance premiums all putting pressure on everyday budgets.
“If there is a hike in March, banks are likely to pass it through to their variable rate customers in full, but there are ways to outsmart the rise.
“Banks might apply a blanket increase to their variable customer base, but still be willing to hand out cuts on a case-by-case basis. Often it’s just a matter of stating your case.”
