Interest rate forecast 2026: when will rates go up in Australia?

In February of this year, the Reserve Bank of Australia (RBA) cut the cash rate for the first time since 2020, and since then, the cash rate has been cut twice more, most recently at on August 12, bringing it to its current level of 3.60%.

In the latter half of 2026, though, inflation began creeping up again, and the RBA closed the door on any further rate cuts for 2025 at its December meeting, where it held steady.

The bank’s board makes its next announcement on Tuesday February 3, but at this point, the question is if, rather than when we will see any interest rate relief in the new year.

What do the major banks say about future cash rate hikes?

ANZ predicts no further cuts in the current cycle.

CommBank predicts no further cuts in the current cycle.

NAB predicts no further cuts in the current cycle.

Westpac predicts a 25 basis point cut in May and another one in August, taking the cash rate to 3.10% by late 2026.

Will rates rise in 2026?

Canstar’s data insights director Sally Tindall says that, with inflation presently not on track to get back within the central bank’s target band of 2-3%, rate rises are not out of the question in the new year.

“At this stage, not even the RBA knows with any great certainty whether its next move will be up or down,” Tindall says.

“Borrowers with a mortgage should not plan for any further rate relief in 2026, and instead, start preparing for a potential hike, just in case one materialises later next year.”

How to ease the pain on your mortgage

There are ways you may be able to pay off your home loan quicker than planned. For example, paying more than the minimum required, or switching from calendar monthly to fortnightly payments can help you reduce the outstanding amount on your loan faster.

You can use our extra repayments calculator to see how that could affect your home loan.

If you’re worried about the impact of any rate rise on your home loan repayments, you might want to consider reviewing your loan. A good place to start is by researching what other rates and loans are on the market, via a comparison website such as Canstar.

Armed with this information, you may choose to discuss with your lender what options may be available, such as fixing all or part of your loan. If you’re in a position to do so, you could also consider asking them for a lower rate, citing examples of other rates on offer.

You may also want to consider switching lenders to take advantage of a more competitive deal, including any refinance offers. But refinancing could involve the payment of fees, so it’s a good idea to read all important documentation, such as the Target Market Determination (TMD) and Key Facts Sheet, before making a decision.

Of course, any rate rise, while bad news for mortgage and other loan customers, would be good news for savers.

Anyone with savings in an interest bearing account will likely be looking for greater return on their money but borrowers will be keen to keep their repayments low, and that’s the challenge the RBA faces every time it meets to consider changing the cash rate.