The Reserve Bank of Australia has lifted the cash rate to 4.10%, pushing up repayments across common loan sizes agents are seeing on the ground. A $500,000 mortgage will now cost around $159 more per month, rising to $238 on a $750,000 loan and $318 on a $1 million loan; figures that reflect the borrowing levels many metro and upgrader clients are currently carrying.
For agents, the impact is immediate: reduced borrowing capacity, tighter buyer budgets, and increased price sensitivity.
With Michele Bullock, Governor of the RBA, warning inflation risks remain elevated, these repayment increases are likely to keep shaping buyer behaviour and vendor expectations in the months ahead.
Read what our experts had to say:
Eleanor Creagh, REA Group Senior Economist
“While inflation has eased from its peak, underlying price pressures remain above the RBA’s 2-3% target band. January’s inflation data showed trimmed-mean inflation still running above target, while housing costs and services inflation remain sticky. With unemployment still low and economic activity holding up better than expected, the Board judged that a modest further tightening in policy was warranted to ensure inflation returns to target over time.
“For housing markets, today’s decision will temper the improvement in borrowing capacity that followed rate cuts in 2025. Higher mortgage rates will add to affordability constraints for buyers and will slow the pace of price growth from the strong gains recorded through 2025. National home prices have risen solidly over the past year. However, affordability remains stretched, and further tightening in monetary policy will limit the pace of further price increases through 2026.”
Domain’s Chief of Research and Economics, Dr. Nicola Powell
“Even with higher interest rates, structural pressures in the housing market mean prices are unlikely to fall. Instead, we expect values to keep rising, but at a slower and more moderate pace. That said, some pockets of Sydney are likely to show more weakness than others.
“Chronic supply shortages, combined with strong population growth, continue to support demand, particularly in entry-level housing segments, where competition remains strongest. While higher borrowing costs are limiting how far buyers can stretch their budgets, entry-level housing is still likely to outperform, partly due to government incentive programs.
“Markets such as Perth, Adelaide, and Brisbane illustrate this trend. While higher interest rates are tempering momentum, these more affordable cities are still recording strong price growth, highlighting the persistent structural imbalance between supply and demand.”
BresicWhitney Director/ Acting CEO, Will Gosse
“The RBA’s decision to raise rates again will deepen a slowdown that was already underway – sales volumes are tracking lower than this time last year, transactions are taking more care and patience to bring together, and the risk is that this caution extends through Easter and into the back half of autumn, typically one of the most active periods for buying and selling.
“Importantly, this isn’t a supply story. Listing levels remain healthy. The change has been in buyer decision-making since February’s rise. The shift in the rate narrative has been quite rapid, and it’s understandable that consumers are taking time to adjust to what further increases may mean for them.
“What we know about Sydney is that it remains one of the world’s most desirable housing markets. Periods of adjustment like this are a normal part of any cycle – they create the conditions for recalibration, and when buyers and sellers find that common ground again, the market moves. The fundamentals here haven’t changed.”
Nerida Conisbee, Ray White Chief Economist
“Inflation has remained stubbornly above the RBA’s target band, with headline inflation at 3.8 per cent and underlying inflation still elevated. More recently, escalating conflict in the Middle East has pushed oil prices sharply higher, increasing petrol prices and raising concerns that inflation could accelerate again.
“The surge in fuel prices has already begun feeding into household expectations, with consumer inflation expectations rising to a three-year high. Rising expectations are closely watched by central banks because they can influence wage negotiations and pricing decisions across the economy.
“While the initial shock to energy prices is global in nature, the RBA has acted to prevent temporary price increases from becoming embedded in broader inflation. Allowing inflation expectations to drift higher would risk prolonging the period of elevated inflation.
“Housing continues to present a difficult policy trade-off. Rising rents and new dwelling costs are being driven largely by structural problems. Higher interest rates will not calm rental growth and may further discourage new housing construction.
Australia’s housing market has remained resilient despite higher interest rates. Prices rose strongly in 2025, supported by population growth and constrained supply. Higher borrowing costs will limit borrowing capacity and slow price growth in 2026, but the underlying shortage of homes means upward pressure on prices and rents is likely to continue.”
The Agency Insights Partner Cameron Kusher
“The RBA has increased interest rates by 25 basis points to 4.10 per cent at its March meeting, following the increase in February. The decision reflects a Reserve Bank that felt inflation was at a level well above their target range and acknowledged GDP data had come in stronger than their forecasts.
“For the property market, this decision will reduce mortgage borrowing capacity by around 2.5 per cent and is likely to slow demand for housing, especially considering the possibility of further rate increases this year. For those looking to purchase, the rate hike may also create some urgency especially for those buyers with pre approval, who want to buy before their approval expires as they may not be able to borrow as much.
“For those that reduced their mortgage repayments last year as the interest rates fell or those that have purchased recently, will be facing higher mortgage repayments. When higher mortgage costs are coupled with higher levels of inflation it will be a tough pill to swallow for many households but are largely considered necessary move to try to curtail persistent high inflation.”
Nigel O’Neil, Woodards CEO
“The latest rate rise to 4.1% reinforces that borrowing costs are moving higher again, and we’re already seeing buyers adjust their expectations. The February increase had already started to show up in the auction market, and another rise will likely reinforce that trend.
“In Melbourne, the preliminary clearance rate slipped to 66.9% on the weekend just gone, down from 67.9% the week prior. On that weekend, Melbourne’s final clearance rate was revised down to 52.6%.
“Across the combined capitals, the preliminary clearance rate also dipped to 66.6% on Saturday, while the week before the preliminary clearance rate dropped from 72.1% down to a final figure of 57.9%. This highlights that buyers are becoming more cautious as borrowing capacity tightens. That’s a typical pattern when interest rates move higher, the first shift tends to appear in auction competition before it flows through to price growth.
“At the same time, rising inflation pressures linked to global uncertainty, including the conflict in the Middle East and higher petrol and energy prices, mean households are watching their budgets much more closely. While the Reserve Bank will be watching inflation closely, the outlook suggests another
rate rise in the coming months remains a real possibility.”
Knight Frank’s Chief Economist Ben Burston
“A second consecutive rate increase reflects the RBA’s concern over rising inflation, further complicated by the recent rise in oil prices.
“For property markets, higher funding costs and global uncertainty will weigh on sentiment and liquidity in coming months, but this needs to be balanced against improving prospects for rental growth given limited supply pipelines across multiple sectors, including office, industrial and living sectors.
“This will act to support returns over the medium term, and we are already seeing evidence of this in the office market where strong growth is now being recorded in Sydney, Brisbane and Adelaide with other cities set to follow.”
Oliver Hume Property Group Chief Economist, Matt Bell
“No more waiting for March quarter inflation data in late April, today’s decision felt inevitable once all the big four bank economists fell into line with financial markets in expecting the 0.25% rate increase. Share markets and consumer confidence holding up in the face of global instability would have helped confirm the Board’s decision. The daily deterioration in the oil price outlook would have given it some pause.
“We’re now only 0.25% below where we were before the cuts began just over a year ago, and that will nearly certainly disappear before the middle of the year.
“What does this mean for property markets? Overall, we do expect new house and land purchasing activity to slow until there is some stabilisation in the outlook for rates. This effect will be bigger in the most rate sensitive market in the country, Sydney, but will be felt everywhere.
“Those hot markets like Perth, Brisbane and Adelaide will slow faster than previously expected, and any increase in the current soft dwelling price growth in Sydney and Melbourne will be muted.
“Higher inflation and more rate hikes than we expected last year will give all property markets some pause. It will hasten the slowing in those hot markets, and delay any recoveries we expected in markets that have been struggling.”
Group Head of Research and Business Intelligence, Mathew Tiller
“What happens in the Middle East will matter for Australians, and how much of an impact really depends on how long the conflict drags on.
“The first impact will be higher fuel and energy prices, and if it continues, that could broaden into higher shipping and import costs. This is the sort of thing that the RBA will be watching closely, and it adds to the case of interest rates staying higher for longer.
Auction clearance rates in Sydney and Melbourne are slightly down from 12 months ago; however, listing volume has increased. Data from recent weeks suggests vendors are opting to take attractive early offers rather than put their property under the hammer.
Mr Tiller said the new cash rate is lower than in January last year, before the RBA began its short reduction cycle.
He also anticipates that luxury and prestige markets will be the most impacted by the RBA’s announcement, where mortgage holders tend to have bigger loans and are more sensitive to any rate fluctuations.
“While the economy may be holding up well enough to absorb another rise, it comes before we have a chance to see the impact of the February rate increase,” he said.
“We expect property prices to continue to rise; however, sales could slow in the top end of the market, which in Sydney and Melbourne is above $3 million, above $2 million in Brisbane and $1.5 million in Adelaide.”
