Rising Interest Rates and Refinancing in 2026: What Borrowers Need to Know

Posted on 19th March 2026

​

If you have been keeping an eye on the home loan market this year, one thing is becoming clear.

Interest rates are moving again, and not in the direction most borrowers were hoping for.

With Australia’s major banks forecasting further RBA increases in 2026, many homeowners are starting to ask some important questions.

• Should I be refinancing now?

• Is my current rate still competitive?

• How much more could my repayments increase?

Let’s walk through what is happening, in plain terms, and what proactive borrowers are doing in response.

 

Why rates are expected to rise

​

All four major banks, NAB, CBA, Westpac and ANZ, are forecasting further RBA rate increases in March and May 2026. If this plays out, the cash rate could rise to around 4.35 percent.

The key drivers include ongoing inflation, which remains above the RBA’s target range, rising oil prices linked to global tensions, and stronger than expected demand across several sectors of the economy.

For borrowers, the takeaway is simple. Repayments are likely to increase.

As a rough guide, every quarter percent rise adds around ninety to ninety five dollars per month on a six hundred thousand dollar home loan. Two increases could mean close to one hundred and ninety dollars extra each month.

 

What this means for your home loan

​

Earlier in the year, average home loan rates briefly dipped below six percent. As at early March 2026, the average thirty year loan was sitting at around 5.99 percent. That window now appears to be closing.

As rates trend higher, more borrowers are reviewing their loans to avoid paying more than they should. Common concerns include being charged a loyalty premium for staying with the same bank, rolling onto higher standard variable rates without realising it, and being caught off guard by multiple RBA increases.

This is where refinancing starts to matter.

 

Why refinancing is picking up in 2026

​

Refinancing activity is expected to increase by around fifteen percent this year. Competitive lender offers, simpler switching processes and a desire to get ahead of rising rates are all driving this shift.

There are a few key reasons borrowers are choosing to refinance now.

First, many people are no longer on a competitive rate. APRA data shows that more than thirty percent of borrowers are paying at least half a percent above the best rate available to them, often because their loan has not been reviewed for several years.

Second, fixed rates taken out in 2022 and 2023 are expiring. Borrowers who locked in very low rates during that period are now rolling onto significantly higher variable rates unless they take action.

Third, even small rate increases are having a noticeable impact on household cash flow. Refinancing can help soften that impact.

Finally, many borrowers have built up equity as property values have risen. That equity can create opportunities to restructure loans, consolidate debt or fund future plans.

 

So should you refinance?

​

The simplest way to think about it is this.

Refinancing may be worth exploring if your rate starts with a six, you have not reviewed your loan in the past one to two years, you are coming off a fixed rate soon, you want to improve cash flow ahead of further RBA increases, or you are considering using equity for renovations, upgrades or investment.

On the other hand, refinancing may not be urgent if your rate is already very competitive, you are comfortable staying in a specific fixed period, or you value stability over chasing incremental savings.

The key point is that you will not know where you stand until someone runs the numbers properly.

The gap between loyalty rates and genuinely competitive market rates continues to widen, and many borrowers only realise they are overpaying once their loan is reviewed.

 

What most banks do not tell you

​

Refinancing is not just about securing a lower rate. Just like offset and redraw features, there is no one size fits all solution.

Common mistakes we see include staying with the same bank for years and paying thousands more than necessary, focusing only on headline rates while overlooking fees or cashback conditions, fixing loans without fully understanding the restrictions, and restructuring loans in a way that reduces flexibility later on.

Strategy matters just as much as price.

 

The bottom line

​

Interest rates are expected to rise again, and lenders are already adjusting their pricing in anticipation.

At the same time, refinancing activity is increasing as borrowers try to stay ahead of higher repayments, reduce unnecessary costs and avoid paying loyalty margins.

As a general rule, if your loan has not been reviewed recently, it is worth checking. If you are coming off a fixed rate soon, reviewing it early can make a meaningful difference. And if repayments are already starting to feel tight, exploring refinance options may help.

Even if nothing changes, a review provides clarity and peace of mind.

 

Final thoughts

​

The home loan market is shifting quickly in 2026. With further RBA increases expected, lender pricing changing and refinancing on the rise, now is a sensible time to make sure your loan is working for you, not against you.

If you would like an obligation free review of your current rate and loan structure, we are always happy to take a look and talk through what options may be available.

​