The Reserve Bank of Australia raised the cash rate again on 3 February 2026, lifting it from 3.60% to 3.85%. If you have a variable rate home loan, your repayments just went up. Here's what actually happened, what it means for your mortgage, and what you should consider doing about it.

What the RBA Decided

The RBA's Monetary Policy Board voted to increase the cash rate by 0.25 percentage points, taking it to 3.85%. It was a unanimous decision.

This is the first rate hike in over two and a half years. After a period of rate cuts intended to support the economy, the RBA reversed course. The reason: inflation isn't coming down fast enough. Costs in services like rent, insurance, healthcare, and education remain elevated, and household spending has been stronger than expected.

In short, the RBA decided the economy can handle higher rates and that holding them steady risked letting inflation become entrenched.

What It Means for Your Mortgage Repayments

If you're on a variable rate loan, your bank has almost certainly passed on the full 0.25% increase. All four major banks moved within days of the RBA's decision.

In dollar terms, a 0.25% increase adds roughly $90 per month to repayments on a $600,000 loan. That's over $1,000 extra per year, on top of any previous increases you've already absorbed.

If you're on a fixed rate, you won't feel this hike directly, at least not yet. But fixed rate terms end. When yours does, you'll revert to a variable rate that reflects the current market, not the rate you locked in years ago.

What's Likely to Come Next

Three of the four major banks are currently forecasting a second rate hike in May 2026. If that happens, the cash rate would move to 4.10%.

Combined with the February increase, two hikes would add around $200 per month to a $600,000 variable loan compared to January. That's roughly $2,400 per year.

These are forecasts, not certainties. The RBA will make its decision based on inflation data between now and May. But it's worth knowing what the current market expectation is so you're not caught off guard.

Should You Do Anything Right Now?

Here's the honest answer: it depends on your situation.

If you're on a variable rate and haven't reviewed your loan in the past 12 to 18 months, it's worth taking a look. The lending market has changed, and your bank won't proactively come to you with a better deal. They price new customers better than existing ones. That's just how it works.

Reviewing your loan doesn't mean you have to switch. It means finding out whether what you're paying is still competitive, given where rates actually sit today. Sometimes the answer is to stay put. Sometimes there's a meaningful saving on the table. You won't know until someone checks.

That said, this isn't a decision to rush. A rate hike creates urgency in the market, and some lenders and brokers will use that to push people into quick decisions. The right call is to understand your situation clearly first, then act if it makes sense.

If your fixed rate is due to expire in the next six to twelve months, now is a particularly good time to get ahead of it. You have options before your rate reverts, and those options narrow as the expiry date gets closer.

A Free Rate Review Costs You Nothing

At Swish, we don't tell you to switch before we've had a proper look at your loan. We check your current rate against the market, factor in your offset account, remaining term, and any features worth keeping, and give you a straight answer on whether it's worth doing anything.

If you're on a good deal, we'll tell you. If there's a better option, we'll walk you through it. No pressure, no obligation.

With another potential rate hike on the horizon, knowing where you stand is worth five minutes of your time. Book a free call with Swish and we'll take a look.