March Rate Report: Inflation Forces the RBA’s Hand

The Reserve Bank of Australia has increased the cash rate to 4.10%^[1], in the second cash rate hike in as many months. With the cash rate raised, variable interest rates are sure to follow. This will likely put a strain on home buyers and home owners.

Why the RBA Raised the Cash Rate.

Further rate hikes this month seemed unlikely when the RBA raised rates for the first time in early February. While we expected the cash rate to rise this year, we expected the next rise to come in May. However, with inflation only continuing to increase and oil prices being forced up, the last couple of weeks generated a “perfect storm” for a rate increase^[2].

AMP Chief Economist Shane Oliver predicts that oil prices could drive inflation up by 0.8 points. This would bring headline inflation to 4.6% ^[3]. This would put inflation well beyond the RBA’s preferred inflation range of 2-3%. As a result, high inflation forces a rate change.

How This Affects Home Buyers.

Interest rates continue to crawl up, which in turn will reduce the borrowing power home buyers have. Consequently, fewer properties may be available to home buyers, or home buyers will have to save a little longer to afford them.

While Sydney and Melbourne’s property markets are steadying with rising interest rates, Adelaide, Brisbane, and Perth are still growing. In particular, Perth is surging in value towards a median home value of $1,000,000.

If you are reconsidering buying a home, make sure to chat with your MoneyQuest mortgage broker. We can help you explore your options, access suitable grants and incentives, and put together a savings plan. This plan will help get you into your dream home faster.

What This Means for Home Owners.

Home owners on a variable interest home loan can expect the interest on their monthly mortgage repayments to go up.

There are options available to home owners. Refinancing to a fixed-rate home loan can help protect you from future rate hikes. This means you will be paying the same amount for a steady amount of time, even if interest rates start coming down. There are also fees associated with refinancing, so be sure to discuss with your MoneyQuest broker to ensure the savings you make outweigh the cost.

What’s Next? 

Two rate hikes in two months are extreme, and while we may see more hikes this year, we’re hoping these two increases do their job to curb inflation. The RBA will be watching inflation carefully to ease interest rates when it believes it’s suitable. It will also be watching unemployment to ensure it is not too low. The next cash rate decision is 5^th of May and another hike is still very much possible. So if you’re starting to feel the squeeze, reach out to your local MoneyQuest broker now. We can help you explore your options from repricing to refinancing to debt consolidation and more.

[1]Reserve Bank of Australia (2026). Statement by the Monetary Policy Board: Monetary Policy Decision | Media Releases. [online] Reserve Bank of Australia. Available at: https://www.rba.gov.au/media-releases/2026/mr-26-03.html [Accessed 17 Mar. 2026].

[2] Taylor, D. Chalmers, S. War, oil, inflation are all creating interest rate perfect storm. [online] Abc.net.au. Available at: https://www.abc.net.au/news/2026-03-11/rba-forecast-to-hike-interest-rates-as-middle-east-war-continues/106441154 [Accessed 12 Mar. 2026].

[3] Dew, L. (2026). Relative Return Insider: US–Iran conflict, oil shock risks and Aussie impact. [online] Investor Daily. Available at: https://www.investordaily.com.au/relative-return-insider-us-iran-conflict-oil-shock-risks-and-aussie-impact/ [Accessed 10 Mar. 2026].

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