All Big Four Banks Now Predict RBA Rate Hikes in 2026

In a significant shift that has caught many borrowers off guard, all four of Australia's major banks are now predicting the Reserve Bank will raise interest rates in 2026. This unanimous forecast comes after surprise inflation data showed prices rising faster than expected, forcing banks to abandon hopes of rate cuts this year.

What Triggered the Forecast Change?

The Consumer Price Index (CPI) data released for December showed annual inflation at 3.8%, up from 3.4% in November. The trimmed mean inflation - the RBA's preferred measure - rose to 3.3% annually, above the central bank's 2-3% target range.

According to Commonwealth Bank's Head of Australian Economics, Belinda Allen: "The breadth of price increases and the resilience of economic activity suggest that underlying inflationary pressures have broadened and lifted."

This data has fundamentally changed the outlook for interest rates, with Greg Jericho, chief economist at the Australia Institute, stating there is now "no real chance" of a rate cut this year.

What Each Bank Is Predicting

Here's how each of the Big Four banks sees interest rates moving in 2026:

NAB's more aggressive forecast of two rate hikes is particularly notable, suggesting inflation pressures may persist longer than initially expected.

How Much Will Your Repayments Increase?

If the RBA raises rates and banks pass on the full increase, here's what borrowers can expect:

For Sydney borrowers with larger mortgages, the impact is substantial. If NAB's forecast of two hikes proves correct, a household with a $1 million mortgage would see repayments increase by over $300 per month.

What This Means for Borrowers

The consensus among economists points to several challenges for mortgage holders in 2026:

• Sustained elevated repayments - Rates are likely to stay higher for longer
• Tighter borrowing capacity - New borrowers and those refinancing will qualify for less
• Serviceability pressures - Borrowers already near their limits will feel the squeeze
• Fixed rates already rising - Lenders have started increasing fixed rates in anticipation

Fixed Rates Are Already Moving

Banks aren't waiting for the RBA. Westpac recently increased some fixed home loan rates by up to 0.35%, marking the second rise in just over a month. Data shows only 29 lenders are still offering fixed rates below 5%, down from 43 a month earlier.

If you're considering fixing your rate, the window for competitive fixed rates may be closing.

What Should You Do Now?

1. Stress Test Your Budget

Calculate whether you can afford repayments if rates rise by 0.50% (NAB's forecast). Build a buffer in your budget now rather than scrambling later.

2. Review Your Rate Urgently

If you haven't checked your rate in the past 6 months, you could be paying more than necessary. Even a small rate reduction can offset the impact of RBA increases.

3. Consider Your Fixed Rate Options

While fixed rates are rising, locking in now could still protect you from further increases. Consider splitting your loan - fixing a portion while keeping some variable.

4. Maximise Your Offset

Every dollar in your offset account reduces the interest you pay. Now is the time to direct any extra savings into your offset.

5. Talk to a Broker

A mortgage broker can assess your full situation and identify opportunities - whether that's refinancing, restructuring, or negotiating a better rate with your current lender.

When Will We Know for Sure?

The RBA Board meets on 2-3 February 2026, with the decision announced at 2:30pm AEDT on Tuesday 3 February. This will be the most closely watched RBA decision in months.

Get Ahead of the Rate Rise

Don't wait until after the RBA decision to act. With all major banks aligned on rate hikes, now is the time to review your mortgage strategy and ensure you're in the best position possible.

At JMD Mortgages, we're helping clients across Sydney prepare for rising rates - whether that's refinancing to a more competitive rate, restructuring loans, or simply getting a health check on their current mortgage.