The RBA delivered another +0.25% rate hike on Tuesday 6 May 2026, taking the cash rate to 4.35%. Sydney homeowners on variable rates will see repayments rise within 2–4 weeks. Here's what's happening, what it costs, and what to do about it.
The TL;DR
- RBA cash rate is now 4.35% after the +0.25% hike on Tuesday 6 May 2026 — third rise of the year
- Next decision: Tuesday 3 June 2026, 2:30pm AEST
- Big 4 banks now expect a pause in June; Westpac forecasts further rises into Q3 if inflation stays sticky
- On a $600,000 loan, a 0.25% rise adds ~$101/month in repayments
Why this article exists
The RBA has now raised rates 3 times in 2026 — most recently on 6 May. Variable-rate borrowers will feel this rise within 2–4 weeks. We're publishing this because Sydney borrowers — particularly self-employed and refinance clients — are asking us what to do next. This article summarises the new landscape and the practical options.
What's Happening with the Cash Rate Right Now
The Reserve Bank of Australia has now raised the cash rate three times in 2026. February delivered +0.25%, March added another +0.25%, and on Tuesday 6 May 2026 the RBA delivered the third +0.25% hike — bringing the cash rate to 4.35%.
The driver is inflation. Annual inflation sat at 3.7% in the most recent reading — well above the RBA's 2–3% target band. Pressure on petrol and energy from ongoing Middle East conflict has added to underlying inflation, making it harder for the RBA to pause without seeing further price pressure.
For Sydney borrowers, the practical impact is clear: variable rate mortgages are now meaningfully higher than they were six months ago, and revert rates after fixed-term expiries are landing higher than many borrowers expected.
What the Big 4 Banks Are Forecasting Next
After the 6 May +0.25% hike, the Big 4 banks have shifted their forward view. The current positions:
- ANZ, CBA, NAB: Likely pause in June 2026, then a hold through winter while assessing inflation data. CBA tipping a possible cut by Q4 2026 if inflation eases
- Westpac: Two more +0.25% rises possible — peaking at 4.85% by Q3 2026 — if core inflation stays sticky. Westpac is the most hawkish of the Big 4
RBA Governor Bullock signalled at the post-decision press conference that further hikes remain possible if inflation prints don't show clear improvement. Sydney borrowers should plan their next 6 months around the higher end of forecasts, not the lower.
What "mortgage stress" looks like in 2026
According to Roy Morgan data from March 2026, around 26.8% of Australian mortgage holders — roughly 1.447 million households — are now classified as "at risk" of mortgage stress (where loan repayments consume too much of household income). Another rise puts more borrowers into that bracket.
What a +0.25% Rise Means for Sydney Repayments
Here's the worked example for a typical Sydney loan:
| Loan amount | Variable rate | Monthly repayment | Annual cost |
|---|---|---|---|
| $600,000 | 6.50% (pre-hike) | ~$3,792 | ~$45,504 |
| $600,000 | 6.75% (post-hike) | ~$3,893 | ~$46,716 |
| Difference | +$101/mo | +$1,212/yr | |
For a larger Sydney loan of $900,000, the same 0.25% rise translates to approximately $152/month or $1,820 per year. Stack two rises (+0.50% total) and that doubles. Over a 25-year loan term, the compound effect is meaningful.
If you're self-employed or have credit issues, you're likely already on a higher rate than a clean-file PAYG borrower — which means a rise hits proportionally harder.
What Self-Employed Borrowers Should Do This Week
Self-employed borrowers face the rate rise environment differently. Specialist lender pricing tends to move with the market but often with a lag, and serviceability buffers are calculated against your declared income — which means assessable income shifts more dramatically with each rise.
- Check your current rate. If you haven't reviewed in 12+ months, you're likely paying more than necessary. The market for self-employed lenders has expanded — Pepper, Liberty, La Trobe, Resimac, Bluestone all offer competitive rates depending on your profile.
- Review your last 2 BAS quarters. Strong recent quarters can lift assessable income, sometimes enough to access mainstream lenders rather than specialists.
- Avoid lodging multiple applications. Each enquiry shows on your credit file. A specialist broker pre-qualifies your situation against lender appetites before any application is made.
Is Now a Good Time to Refinance?
The short answer: maybe — and the only way to know is to compare your current rate against what's achievable in the current market.
For most Sydney borrowers, a 0.4–0.8% rate improvement is realistic by switching lenders. On a $600,000 loan, that's $2,400–$4,800 per year — which more than offsets the impact of one more RBA rise. Specialist lenders are competing aggressively for refinance business right now, and many are offering cashback incentives ($2,000–$4,000) to switch.
Where refinancing doesn't make sense:
- You're locked into a fixed rate term and break fees would exceed potential savings
- You're planning to sell within 12 months
- Your equity has dropped below 80% LVR and refinancing would trigger LMI
A free broker review surfaces these factors quickly. The cost of doing nothing — staying on a high revert rate as the RBA continues to lift — is usually higher than the cost of switching.
After the May 2026 hike
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Frequently Asked Questions
If you're on a variable rate, yes — most lenders pass on RBA rises within 2–4 weeks of the decision, occasionally with a delay. If you're on a fixed rate, your repayments stay the same until your fixed term expires. Once it does, you revert to the lender's variable rate at that time, which will reflect any RBA rises that have occurred.
Fixed rates already factor in expected rate rises, so locking in won't necessarily save you money in the short term. The decision depends on your situation: do you need certainty for budgeting, do you expect to sell or refinance soon, and how much break-fee exposure are you comfortable with? A broker can model your scenarios.
On a $600,000 loan with 25 years remaining, moving from 6.5% to 6.75% lifts monthly repayments from approximately $3,792 to $3,893 — an extra $101 per month, or roughly $1,212 per year.
Possibly — particularly if you're stuck on a high revert rate after a fixed term ended, or if you haven't reviewed your loan in 2+ years. Comparing across 40+ lenders often surfaces a 0.4–0.8% rate improvement, which more than offsets the impact of one more rise. A free broker review identifies whether refinancing makes sense for your situation.
After the May 2026 hike — speak to a Mortgagefy broker
Free rate review across 40+ lenders. We tell you exactly what's achievable in the current market and whether refinancing now saves you money. No obligation.
General information only. The information in this article is general in nature and does not constitute personal financial, taxation, or credit advice. RBA cash rate, lender rate, and bank forecast figures are current as of 10 May 2026 and subject to change. Repayment examples are illustrative and assume principal-and-interest payments over a 25-year term. Mortgagefy is an authorised credit representative under Australian Credit Licence 348324. Before acting on any information, consider whether it is appropriate to your personal circumstances and seek independent financial or credit advice. Sources: Reserve Bank of Australia, Roy Morgan Research, Canstar, Aussie Home Loans, ANZ Research, Westpac Economics — April 2026.
"Mortgagefy reviewed our rate before the March hike — switched us from 6.95% to 6.25%. Saved us about $290/month and we beat the rate rise. Took 4 weeks end-to-end."
Anjali & Ravi M. · Marsden Park · Refinance client
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