RBA Rate Hike: Should You Fix Your Home Loan Rate?

The cash rate moved higher again

On 3 February 2026, the Reserve Bank of Australia increased the cash rate target by 25 basis points, lifting it from 3.60% to 3.85%, with the change taking effect on 4 February 2026. For borrowers, that puts the focus back on three practical questions: how much repayments may rise, how borrowing capacity may change, and whether fixing the rate still makes sense.

If you are on a variable rate

For borrowers on variable-rate home loans, the immediate issue is higher monthly repayments as lenders pass through some or all of the increase. The timing differs by lender, but the practical step is the same: review your updated repayment amount early and check whether your current monthly budget still works once the higher rate takes effect.

If you are planning to buy now

Higher rates usually reduce borrowing power because lenders assess your ability to repay at a stress-tested rate above the product rate. For some buyers that only narrows the range of properties they can target. For others, it may change the timing of their purchase or the size of deposit required to keep the transaction comfortable.

Should you fix your rate?

There is no universal answer. A fixed rate may suit borrowers who value repayment certainty more than flexibility and expect rates to remain elevated. But by early February 2026, many lenders had already repriced fixed products higher in anticipation of tighter inflation and further policy risk. In practice, that meant borrowers were often comparing the certainty of a mid-5% fixed rate with the flexibility of remaining variable.

Do not overlook offset and redraw

For borrowers with savings, offset and redraw can materially reduce interest cost. This matters because many fixed-rate products either do not include a full offset account or apply tighter restrictions to extra repayments and access to funds. Before fixing, you need to compare product features, not just the headline rate.

A practical framework

• Review your new repayment level: Confirm how much your lender has increased your repayment and when it starts.
• Recalculate your borrowing power: Especially if you are still shopping for property or planning to refinance.
• Compare fixed versus variable on features, not just price: Look at offset access, redraw rules, extra repayment limits, and break-cost risk.
• Keep a liquidity buffer: In a rising-rate environment, available cash matters as much as the nominal rate.

The key point is that a rate hike does not mean every borrower should automatically fix. It means your structure should be reviewed more carefully, with your own cash flow and flexibility needs at the centre of the decision.