RBA interest rates live updates: Nervous wait for homeowners braced for return of mortgage repayment pain

Expectations are high for a Reserve Bank rate hike at its first meeting of the year, but what it does next is much less certain.

As the central bank’s board was ensconced in deliberation at its temporary digs around the corner from Martin Place, bond traders were pricing in a greater-than-three-quarter chance of a 25 basis point hike.

Having previously opened the door to a hike with hawkish commentary in December, it was harder now not to walk through it, JP Morgan economists Ben Jarman, Tom Kennedy and Tom Ryan said.

While most economists agree a rate rise on Tuesday is inevitable, they don’t all share the market’s belief the Reserve Bank will hike again before the end of 2026.

“We don’t see a case for further tightening past February at this stage, unless the RBA staff’s forecasts change in a substantial way,” Mr Jarman, Mr Kennedy and Mr Ryan said.

Commonwealth Bank head of Australian economics Belinda Allen agreed.

“We think the RBA will be one and done for interest rate hikes in 2026,” she told AAP.

“Inflation is too high, the economy is growing a little bit above its potential, but it won’t take much to bring the economy and inflation back into balance.

“The risk, of course, is that more will need to be done.

“A lot of that will be driven by how the labour market performs and how upcoming inflation prints go.”

We’re just half an hour away from the RBA’s call on rates.

The decision rests on a knife’s edge, according to comparion site Finder.

More than half of the experts - 17 of 33 from Finder’s RBA Cash Rate Survey believe the RBA will raise the cash rate, bringing it to 3.85 p[er cent in February.

Whci way will it go?

Stay tuned and we’ll bring you all the latest updates as they happen ... and all the infortmation you need to know about what it means for your mortgage and family budget.

Hunting for a home loan?

You can kiss goodbye to rates under 5 per cent if they go up today. It would mark the first hike in two years if the RBA decides one is needed to pull inflation back into its comfort zone.

Here’s what you need to know if you’re shopping for a loan and the RBA lifts rates 0.25 percentage-points today:

• 5.77 per cent would be the new average variable rate for owner-occupiers.
• 6.02 per cent would be the new average variable rate for investors.
• Four lenders would offer a variable rate under 5.25 per cent, down from the 42 currently.
• Fixed and variable rates under 5 per cent would no longer exist.

Rate tracking by Canstar shows a total of 60 lenders have hiked at least one fixed rate since the last cash rate decision on December 9. This compares to only two lenders that have cut fixed rates in this time.

There are now just six lenders offering a fixed rate below 5 per cent, down from 46 three months ago.

Treasurer Jim Chalmers has insisted that the worst inflation challenge is behind us, defending the Albanese Government and his fiscal policy after inflation soared as Aussies brace for a rate hike.

“The numbers which came last week came in not that much higher than we expected,” Dr Chalmers told Sunrise.

“We are managing the Budget and the economy in a responsible way.

“We know that this inflation challenge is more persistent than anyone would like, and that’s why it is our focus.”

Dr Chalmers doubled down on his comments from 2025, where he said the worst of the inflation challenge was behind us.

“The worst inflation that we have had in recent years was in 2022. We came to office, inflation had a six in front of it and was absolutely galloping. It peaked at 7.8 that year,” Dr Chalmers said.

“This year, inflation is higher than we want it to be, it has a three in front of it.”

The RBA will hand down the first rate decision of 2026 at 2.30pm AEDT/ 11.30am AWST.

The prospect of higher interest rates doesn’t appear to be hurting the mortgage market just yet.

The total value of housing loans hit another record high of $2.43 trillion in December, on the back of rising property prices and three cash rate cuts across 2025.

APRA statistics out last Friday showed housing loans among authorised deposit-taking institutions increased by $17.8 billion in December, up 0.7 per cent from the previous month.

Despite this, ANZ’s home loan book went backwards, albeit slightly, falling by $46 million, or 0.01 per cent, the first drop since March 2022, before the previous cash rate hiking cycle.

CBA recorded the largest monthly increase among the big four, rising by almost $5b or 0.8 per cent in the month, yet Macquarie continued to outpace its big bank competitors in percentage terms, increasing by 2.4 per cent (+$3.9b).

Here’s where we’re shopping for a home loan ...

Growth in owner-occupier mortgages was stronger than investor lending in December, however, over 2025 as a whole, investor housing credit grew at a faster pace in percentage terms.

Australia’s share market has rebounded from its worst day in 10 weeks, led by a bounce in mining stocks as investors bought the dip, ahead of a major announcement on local interest rates.

The S&P/ASX200 rose 112.9 points on Monday, up 1.29 per cent, to 8888.4.

The rebound followed a decent Wall Street session after US manufacturing data surprised on the upside, indicating an expansion in the sector not seen since 2022.

“The Australian interest rate market starts the day with 19 basis points (a 76 per cent probability) of a 25 basis point rate hike built in for this afternoon’s meeting,” , IG market analyst Tony Sycamore said.

“Mindful that the RBA never hikes just once, the market is pricing in a second 25 basis point RBA rate hike by September 2026.”

The basic materials sector led 10 of 11 local sectors higher in early trade, bouncing 2.2 per cent after dropping more than six per cent in the previous two sessions.

The segment has been on tear, soaring more than 50 per cent higher in seven months as technological advancement and geopolitical concerns drove demand for scarce strategic commodities.

Gold appeared to find a temporary bottom after plunging into a technical bear market (falling 20 per cent or more from recent highs) on Monday, recovering to $US4828 after falling from a record $US5595.

The case for lifting rates has strengthened considerably following two successive quarters of higher-than-expected inflation, which came in at 3.8 per cent for the 12 months until December.

The all-important trimmed mean inflation rate - which strips out volatile items and the RBA uses to get a gauge of where inflation is heading - was 3.3 per cent in the 12 months to December, up from 3.2 per cent in the 12 months to November 2025.

Commonwealth Bank chief economist and head of global economics markets research Luke Yeaman said the RBA was right to initially wait on interest rates, but the “game had changed”.

“Today, with trimmed mean inflation sitting well above the target band for two quarters, a strengthening economy and falling trend unemployment, the case for action is compelling and the risk of hesitating is large,” he said.

Also boosting rate hike prospects is stronger-than-expected employment data, which shows Australians without a job fell from 4.3 to 4.1 per cent.

While an improving jobs market is a positive for an economy, it can lead to higher consumer spending, which lifts inflation.

For an owner-occupier with a $600,000 mortgage and 25 years remaining, it would see their minimum monthly repayments rise by $90, assuming the banks pass it on (who are we kidding?)

Here’s what it means for other-sized mortgages ...

Key to managing the pain will be a call to your lender demanding a better deal.

Loyalty can cost you dearly - especially when you consider for just how long you’ll be repaying the loan.

Most borrowers just accept a hike because they don’t want the hassle of negotiating a new lower rate. That’s just throwing money down the drain (and into the pockets of the big four banks ... which, incidentally, are collectively valued at just over $625 billion).

“If you’ve got a mortgage, don’t just accept a rate hike unchallenged,” says Canstar’s data insights director, Sally Tindall.

“Instead, neutralise the rise by asking your bank for a cut instead.

“If you haven’t hit them up in the last six months, then it’s time to do it again, particularly if you’re paying an above-average variable rate, which at this point, as an owner-occupier, is above 5.52 per cent.

“A 10-minute phone call could be enough to duck the rate pain.”

The threat of rising interest rates will have an upside for hopeful holiday-makers after the Australian dollar last week hit a three-year high near US71¢.

Australia’s exchange rate has lifted more than US10¢ since the low point of American President Donald Trump’s trade war in April last year. It’s also up against the Japanese yen, British pound sterling and Europe’s Euro in recent months.

This will help the RBA’s inflation fight a little bit.

A stronger currency will tend to soften export earnings and lower prices for consumer goods like cars, clothes and electronics.

The RBA’s experts reckon the effect of interest rates on the Aussie dollar might have an even bigger impact on the overall economy than changes to mortgage payments.

The Reserve Bank of Australia wouldn’t have to hike interest rates on Tuesday if the Federal Government cut back on its high spending, a leading economist says.

On Monday morning financial markets saw a 72 per cent chance of a quarter-of-a-percentage-point increase on Tuesday. All four big banks believe the Reserve Bank will hike, reversing August’s cut.

With both headline and underlying inflation well above the Reserve Bank’s 2-3 per cent target, KPMG chief economist Brendan Rynne said a hike wouldn’t be necessary if the Government cut back spending on the NDIS and taxpayer-subsidised jobs.

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