Will Interest Rates Go Up? What the Latest Inflation Figures Mean for Your Mortgage
Where things stand now
The latest RBA, inflation and mortgage outlook
Interest rate expectations can change quickly as new inflation, employment and economic data arrives. This page is updated as the outlook changes, with a focus on what the latest information may mean for Australian home loan borrowers.
The chance of another rate rise has increased
The RBA held the cash rate at 4.35% in August, but the information released since then has made the outlook less comfortable.
Annual inflation eased from 3.8% in June to 3.5% in July. However, the July result was slightly stronger than expected and trimmed mean inflation remained at 3.6%.
At the same time, Australia's economy grew by 0.4% in the June quarter, taking annual growth to 2.1%. That was stronger than economists had expected and above the RBA's forecast.
The latest figures do not guarantee another increase, but they give the RBA less reason to feel confident that inflation is returning to target quickly enough.
There are still reasons for the RBA to wait. The earlier rate increases are continuing to flow through the economy and household spending remains relatively cautious.
Inflation is falling, but that is not the whole story
Annual inflation eased to 3.5% in July 2026, down from 3.8% in June.
A lower annual inflation rate is positive, but the RBA looks at more than the headline CPI figure when deciding what to do with interest rates.
The important question is whether inflation is falling quickly enough, and sustainably enough, to move back towards the RBA's 2–3% target range.
The July result was also slightly stronger than expected, which is one reason the conversation around another possible increase has returned.
The RBA is looking past one headline number
Trimmed mean inflation removes some of the largest price movements in either direction and can provide a clearer view of persistent inflation across the economy.
In July, trimmed mean inflation remained at 3.6%.
That is important because underlying inflation remaining elevated can make the RBA more cautious about declaring the inflation problem solved simply because headline CPI has fallen.
GDP came in stronger than expected
Australia's economy grew by 0.4% in the June quarter, taking annual growth to 2.1%.
Annual economic growth slowed from 2.5% in March, but it did not slow by as much as economists had anticipated.
Stronger growth can complicate the inflation outlook because it suggests parts of the economy are holding up better than expected.
There is also an important timing issue. The June-quarter figures are too early to show the full impact of the three rate increases delivered earlier in 2026.
Those increases will continue to work their way through mortgage repayments, household spending and broader economic activity.
Will the RBA raise interest rates again?
There is a stronger case for another increase than there was after the June inflation figures, but the next move is still not certain.
- July inflation was slightly stronger than expected.
- Trimmed mean inflation remains at 3.6%.
- GDP growth was stronger than economists expected.
- Annual GDP growth came in above the RBA's forecast.
- Several major-bank economists have changed their rate forecasts.
- Annual headline inflation is still moving lower.
- The full impact of the three earlier increases has not yet worked through the economy.
- Household consumption grew by 0.4% in the June quarter and was softer than many economists expected.
- The RBA may prefer to see more evidence before increasing borrowing costs again.
Major-bank views have started to move
NAB, ANZ and CBA have now moved towards forecasts that include another rate increase in 2026, followed by rate reductions next year.
Westpac is currently maintaining a different view.
These forecasts can change quickly as new information arrives. The fact that economists disagree is itself a sign that the next move is finely balanced.
What does this mean if you already have a mortgage?
Your own loan matters more than trying to perfectly predict the next RBA decision.
If you have a variable-rate mortgage, understand what another rate increase could do to your repayments and household budget.
The cash rate is important, but so is the actual interest rate your lender is charging you.
It can be worth reviewing your options before automatically moving onto your lender's revert rate.
Interest-rate expectations can change quickly. The structure and suitability of your own loan should remain the starting point.
Do you need to wait for interest rates to fall before buying?
Not necessarily.
Interest rates affect borrowing capacity and repayments, but trying to perfectly time the interest-rate cycle can make a home-buying decision harder than it needs to be.
A better starting point is understanding what you can comfortably afford, how lenders may assess your application and what your repayments could look like if rates move in either direction.
Explore first home buyer options →Changing rates are a reason to review, not automatically refinance
An uncertain interest-rate environment can be a good prompt to check your mortgage, but switching lenders is not always the answer.
Is what you're paying still competitive?
Has your loan balance or property value changed?
Do your loan features still suit how you use the mortgage?
Does the loan still fit what you want to do next?
Sometimes refinancing makes sense. Sometimes negotiating with your current lender is enough. In other cases, leaving the loan where it is may still be the best option.
Review your refinancing options →The chance of another increase has risen, but the timing is still uncertain
Martin's current view is that the case for another increase in 2026 has strengthened, but that does not necessarily mean the RBA has to move at its next meeting.
The Board could decide to wait for more information and allow the earlier increases more time to affect spending and the wider economy.
On the other hand, if the RBA believes inflation is not moderating quickly enough and wants to send a stronger message, a September increase remains possible.
How the interest rate outlook has changed
Older commentary is kept here so the latest information can remain prominent without losing the history of how the outlook developed.
July 2026 Softer June inflation reduced expectations of an immediate rise
Annual inflation eased to 3.8% in June while trimmed mean inflation remained at 3.6%.
At the time, the result reduced expectations of another immediate rate increase. The RBA subsequently held the cash rate at 4.35% in August.
Not sure where your home loan stands?
Martin can review your current loan, talk through what has changed and help you understand the options available to you.
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While no one can predict future Reserve Bank decisions with certainty, the latest inflation figures have reduced the likelihood of another interest rate increase in the short term. The RBA will continue to monitor inflation, employment and broader economic conditions before making any changes.
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Inflation is one of the key factors the Reserve Bank considers when setting the official cash rate. When inflation remains above the RBA's target range of 2–3%, interest rates may stay higher or increase. As inflation falls, the pressure for higher interest rates generally eases.
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It depends on your individual circumstances. Even if the RBA keeps rates on hold, lenders regularly change their home loan products and pricing. If you haven't reviewed your mortgage in the last 12 months, refinancing could help you secure a more competitive rate or features better suited to your needs.
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The Reserve Bank of Australia aims to keep inflation between 2% and 3% over time. This range is considered consistent with sustainable economic growth and stable employment. Inflation above this target may lead to higher interest rates, while lower inflation can create opportunities for rate cuts.
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If interest rates stay elevated, it's worth reviewing your home loan to ensure you're still on a competitive rate. Speaking with a mortgage broker can help you compare lenders, explore refinancing options and make sure your loan still suits your financial goals.
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It's a good idea to review your home loan at least once every 12 months, or sooner if interest rates change, your fixed-rate period is ending, or your financial circumstances have changed. Regular reviews can help ensure you're not paying more than you need to.