Brief
- Economists have warned of more interest rate hikes by Christmas.
- Some borrowers are considering refinancing, but there are risks.
As major banks predict more interest rate hikes to come in 2026, some mortgage-holders may have to decide if it’s time to lock in their rate.
In March, Westpac Group chief economist Luci Ellis predicted there would be three more cash rate hikes in the coming months, after the Reserve Bank of Australia (RBA) lifted the rate to 4.10 per cent in early March.
The RBA cited inflation and uncertainties around the war in the Middle East for its decision.
Ellis told the ABC last month she expected the RBA would raise the rate to 4.85 per cent by mid-August.
On Thursday, HSBC chief economist Paul Bloxham said he expected the RBA would hike the cash rate again in May.
But he also warned that beyond the May meeting, the RBA’s decision on rate hikes would depend on another factor.
"[We] expect the RBA's decision will depend on how quickly the economy is weakening and, critically, on whether there are signs that this is feeding through to significant weakening in the jobs market," he said.
With uncertainties around global conflicts and economies looming, some analysts say it might be a good time for mortgage borrowers to review their borrowing rates — but there’s also a risk.
'Absolutely' appropriate timing to review
Dale Gillham, chief analyst at Wealth Within, told SBS News that it was "absolutely" good timing for mortgage holders to review their borrowing rates and decide if they would switch from variable to fixed rates.
He predicted there would be "at least two" interest rate rises this year, while the economy might take a long time to rebound.
"And obviously, if the war’s short-lived, there’s still going to be a re-settling of everything. So I don’t think we are going to see interest rates come down at all this year, and so people may as well save some money," Gillham said.
Sally Tindall, spokesperson at financial comparison site Canstar, also told SBS News that comments from the latest RBA meetings as well as forecasts by major banks could "rattle borrowers", especially those with a tight budget.
But she also said it’s important to keep in mind that forecasts could be subject to change, which would complicate any decision to remortgage.
"Particularly, with the war in the Middle East, [it could] be difficult to kind of forecast and understand the full impact here in Australia under a range of different scenarios. For families, it’s really difficult to forecast," she said.
"If you fix your rate now, it protects you from future cash rate hikes and variable rate mortgage increases from your bank in that fixed rate term, but it also counts you out of any cash rate cuts that we might see coming down the line."
Earlier this week Treasurer Jim Chalmers said the world is entering a "dangerous time" after the International Monetary Fund issued a dire warning that the energy crisis caused by the war in the Middle East could trigger a global recession. If this scenario happened, Tindall said the RBA could turn to cutting rates to support businesses and individuals.
"If you fixed your mortgage rate, and the RBA cuts the cash rate and banks pass it on to variable mortgages, you won't be getting that benefit while you're on a fixed rate," she said.
Dominic Beattie, editor at comparison website savings.com.au, told SBS News that fixed rates are often higher than variable ones.
"Understandably, you might be hesitant to lock in with a higher rate than a variable rate at the moment," he said.
Beattie said before making any move, borrowers also needed to consider the flexibility of their own loans.
"When you're taking out a fixed rate mortgage, typically that means you can't always make extra repayments, and you won't be able to refinance or exit the line within that period without copping pretty high break costs, which can be many thousands of dollars," he said.
How to decide if it’s time to get a fixed rate
In October 2025, the federal government expanded the first home buyer scheme to allow first home buyers to buy properties with a 5 per cent deposit.
Gillham, who has argued the scheme could further push up house prices in Australia as a flood of new buyers hit the market, said borrowers with tight budgets could consider fixing their repayments and increasing their savings amid high interest rates.
But before they make the decision, Gillham said borrowers should focus on their own financial conditions, rather than media headlines and financial analyses.
"We tend to look at the elephant and get despair and confusion," he said.
"What I suggest investors and individuals should say is: 'What can I do today?’, and 'What can I control?’ And one is they get an income coming in, they can set a budget and make sure that they've got their expenses covered."
Tindall said if borrowers decide to fix their rate, it’s important to shop around and make sure to get a competitive rate.
"If you are going to do something like fix your mortgage rate, don't do it in a panic. Make sure that you take the time to understand all the terms and conditions and rules and restrictions that come with that fixed rate," she said.
For those who are still hunting for a house and concerned about shifting borrowing rates, Beattie said individual circumstances should be considered foremost.
"You've got to sometimes ignore all the noise, because it's impossible to time the market perfectly."
Disclaimer: This article is general information. Please see a professional if you need financial advice.
—With additional reporting from the Australian Associated Press
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