Honestly, if you’re waiting for the Reserve Bank of Australia to hand out a massive rate cut this Valentine’s Day, you might want to brace yourself. The vibe in the mortgage market has shifted. Fast.
The latest interest rates news australia is currently dominated by a weirdly split personality among the Big Four banks. We are sitting at a cash rate of 3.60% as of mid-January 2026. For months, everyone was betting on the "downward slope." Then November’s inflation data hit, and while it cooled slightly to 3.4%, it didn't stay down long enough to satisfy the hawks.
Now, the conversation isn't just about "when will they cut?" It’s "wait, are they actually going to hike again?"
The Great 2026 Bank Split: Who Is Right?
It’s rare to see Commonwealth Bank and Westpac looking at the same economy and seeing two totally different futures. But here we are. CBA is actually flagging a potential 25-basis point hike as soon as February 3, 2026. They aren't alone either; NAB is whispering about a second hike in May.
Meanwhile, Westpac is still holding onto the hope of two cuts later this year. It’s enough to give any homeowner whiplash.
Why the drama? It basically comes down to "sticky" inflation. While the headline number looks better than the 3.8% we saw in October 2025, the RBA’s preferred measure—the trimmed mean—is still sitting around 3.2%. That’s above the 2–3% target band. Michele Bullock, the RBA Governor, has been pretty blunt about this. She’s essentially said that while cuts aren't on the immediate horizon, they are actively weighing up whether another nudge upward is needed to kill off the last of the inflation beast.
What’s Actually Moving Your Mortgage Right Now
If you have a variable rate, you’ve probably noticed your bank isn't waiting for the RBA to make a move. Lenders are already tightening their margins.
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- Average variable rates are hovering around 6.41%.
- Some smaller lenders like Unloan or Greater Bank are still fighting for business with rates in the 5.19% range.
- Fixed rates have actually started creeping up again, which is usually a sign that the banks' "crystal ball" departments expect higher costs of funding soon.
It’s a tough spot. If you’re on a $500,000 loan, the difference between a 6.00% rate and a 6.50% rate is about $163 a month. That’s nearly two grand a year. In a cost-of-living crisis, that is a lot of grocery trips.
The "Energy Rebate" Trap
One thing people often miss in the interest rates news australia cycle is the impact of temporary government help. A big reason inflation "dropped" recently was because of electricity rebates in states like Queensland. When those rebates expire, the "real" cost of living jumps back up, and the RBA knows this. They look through the temporary "sugar hits" and focus on the hard data like rent (still rising at 4%) and new dwelling costs.
Why the February 3rd Meeting is Everything
Mark your calendar. The RBA Board meets over two days, concluding on Tuesday, February 3, 2026. This is the first meeting of the year and it will set the tone for the entire Australian winter.
ASX Interbank Cash Rate Futures are currently pricing in about a 25% chance of a hike. That might sound low, but a month ago it was near zero. The market is getting nervous. If the December quarter CPI data (due late January) shows that services inflation—things like haircuts, dining out, and insurance—is still rising, that 25% probability is going to skyrocket.
Andrew Hauser, the RBA Deputy Governor, recently told the ABC that the likelihood of near-term cuts is "very low." He wasn't being mean; he was being honest. The labour market is still relatively tight. People still have jobs, and they are still spending just enough to keep prices from falling to where the RBA wants them.
Actionable Steps for Borrowers Today
Don't just sit there and wait for the news. The "loyalty tax" in Australian banking is real.
- Stress-test your own life. Assume your rate goes up by 0.50% by June. If that makes you sweat, you need to call your bank yesterday.
- Check your LVR. If your home value has stayed steady and you've paid down some principal, you might have dropped below an 80% or 70% Loan-to-Value Ratio. Banks offer much better rates (sometimes 0.30% lower) for "safer" LVRs.
- Look at the "Big Four" alternatives. While CBA and NAB are talking about hikes, some smaller players are still hungry for market share. You don't have to move your whole life, just the mortgage.
- Ignore the "No Change" headlines. Even if the RBA holds at 3.60% in February, the language they use in the statement is what matters. If they remove the word "balanced" and start talking about "upside risks," get ready for a bumpy ride.
The reality of interest rates news australia in 2026 is that the "easy" path to lower rates has been blocked by stubborn service costs. Whether we get one last hike or a long, boring plateau, the era of 2% or 3% mortgages is firmly in the rearview mirror. Refinancing or repricing your current loan is the only guaranteed way to lower your repayments right now.
Take a look at your current statement. If your rate starts with a 6 or a 7, you are likely paying more than you need to, regardless of what the RBA does next month. Shop around before the February volatility kicks in.