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

In February of 2025, 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 2025, 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, and at this point, the big banks are predicting rates may begin creeping up again in the new year.

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

ANZ predicts a 25 basis point rise in February.

CommBank predicts a 25 basis point rise in February.

NAB predicts a 25 basis point rise in February and another in May.

Westpac predicts a 25 basis point rise in February.

Will rates rise in 2026?

Canstar’s data insights director Sally Tindall says that, with inflation running hotter than expected, the RBA has little choice but to make a U-turn back to rate hikes.

“We’re now four long years into the battle with inflation and today’s results confirm we’re once again headed in the wrong direction.

The RBA no longer has the luxury of continuing its ‘wait-and-see’ strategy if it’s serious about getting the inflation job done.”

Citi was the first of the nation’s major banks to predicts rate hikes in the new year, calling one in February and one in May, and CBA was the first of the big four to predict a hike.

NAB had predicted that the cash rate would remain steady throughout the first half of the new year, but economists there have since updated their prediction, calling two hikes, in February and May. ANZ and Westpac also revised their forecasts at the end of January 2026 following the release of fresh inflation data, and are now predicting one 25-point rate cut in February 2026.

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.