RBA Raises Rates Again: Buy or Wait in 2026?

Nobody saw this coming. After three rate cuts through 2025 brought the cash rate down to 3.60 per cent, the mood in Australian property was bordering on euphoric. Borrowing power was up, auction clearance rates were climbing, and the consensus was clear: rates were heading lower and property was heading higher.

Then the RBA raised rates in February 2026. Back to 3.85 per cent. And most major banks now expect another hike in May, potentially taking us to 4.10 per cent.

So where does that leave you if you are thinking about buying a home this year?

What Actually Happened

The 2025 rate cuts worked too well. Household spending bounced back strongly. The property market accelerated. Inflation, which had been tracking back toward the RBA's 2 to 3 per cent target, picked up again in the second half of the year. The labour market stayed tight. Wages remained elevated.

The RBA's February decision was unanimous. Their message was blunt: private demand is growing faster than expected, housing activity is picking up, and inflation is likely to remain above target for some time.

In other words, the rate cuts lit a fire under the economy and now the RBA needs to put some of it out.

Where the Major Banks Stand

The four major banks are broadly aligned on what happens next:

• March 2026: All four banks expect a hold at 3.85 per cent
• May 2026: CBA, Westpac, and NAB expect another hike to 4.10 per cent
• ANZ: The outlier—they believe February's hike will be a one-and-done move

If three of the four major banks are right, mortgage holders could be looking at two rate hikes in the space of four months. On a $600,000 mortgage, that adds roughly $180 per month to repayments compared to the start of the year.

The Case for Buying Now

Here is the uncomfortable truth that the "wait for rates to drop" crowd does not want to hear: Australian property prices have risen in almost every rate environment over the past 30 years. They rose during rate hikes. They rose during rate holds. They rose during cuts. The only sustained price falls came during the most aggressive hiking cycle in a generation—and even those were fully recovered within 18 months.

The structural forces pushing prices higher have not changed:

• Population growth is outstripping supply: Australia's population grew by 8 million over the past decade while listed properties fell 33 per cent
• We are not building enough: Planning constraints, labour shortages, and construction costs mean the housing shortfall will take years to close
• Rents are still climbing: Every month you wait and rent, you are paying someone else's mortgage while property values move further away
• Price growth is forecast at 5 to 7 per cent: 87 per cent of industry professionals expect prices to rise through 2026

If prices grow 6 per cent this year and you are looking at a $700,000 property, waiting 12 months could cost you $42,000 in capital gains you missed—far more than any interest rate saving.

The Case for Waiting

But there is a genuine argument for patience, and it is worth hearing honestly:

• Borrowing power has dropped: The February hike and a potential May hike directly reduce what the bank will lend you. If you are stretching to your limit, you may need to recalibrate
• Affordability is at record lows: The ratio of median house prices to median incomes has never been worse. At some point, prices have to slow because buyers literally cannot borrow enough
• The rate direction is uncertain: The RBA went from cutting to hiking in the space of six months. Predicting the next move is a coin flip. Buying at peak uncertainty carries risk
• Some markets are overheated: Perth, Adelaide, and Brisbane saw extraordinary growth in 2024 and 2025. Those gains may moderate or temporarily reverse

What the Smart Money Is Doing

Here is what experienced buyers and investors tend to do in uncertain rate environments: they stop trying to time the market and start optimising their position.

1. Get pre-approved now: Understand exactly what you can borrow at current rates. If rates rise again in May, your borrowing power drops further. Locking in a pre-approval gives you clarity
2. Build a rate buffer: Do not borrow to your absolute maximum. Give yourself headroom for one or two more rate hikes. If they do not come, you have extra equity. If they do, you can still sleep at night
3. Focus on the property, not the cycle: A well-located property in a supply-constrained area will outperform regardless of what the RBA does over the next 12 months. Buy quality and hold
4. Consider fixing a portion: With rate uncertainty this high, splitting your loan between fixed and variable hedges your risk in both directions
5. Do not panic about headlines: Media coverage of rate hikes is designed to generate clicks. A 0.25 per cent move on a $500,000 loan is about $18 per week. That is not nothing, but it is not catastrophic either

The Real Question You Should Be Asking

The question is not "will rates go up or down?" Nobody knows. The RBA itself got it wrong—they were cutting rates six months ago and are now raising them.

The better question is: "Can I afford to buy a good property today, hold it for 7 to 10 years, and weather some rate volatility along the way?"

If the answer is yes, then the best time to buy is almost always now. Not because the market timing is perfect—it never is—but because time in the market consistently beats timing the market.

If the answer is no, that is fine too. Use this time to save aggressively, reduce debts, and get your financial position as strong as possible for when the time is right.

What to Do Next

Whether you are ready to buy now or still preparing, the most valuable thing you can do is talk to a mortgage broker who understands the current rate environment. They can model exactly what your repayments look like at 3.85 per cent, at 4.10 per cent, and beyond—so you make a decision based on numbers, not headlines.