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"Australia's inflation remains high, prompting predictions of a third cash rate hike. Borrowers face increased repayments amid rising oil prices." - Harry Bailey, Finance Manager
A third cash rate hike remains firmly on the cards, with the latest round of CPI data confirming Australia’s inflation rate remains well above target.
Data from the ABS for February, released today, saw headline inflation drop from an annual rate of 3.8% to 3.7%, while core inflation remained relatively steady at 3.3% p.a, where it has broadly been hovering for the last six months.
Add in the current oil crisis, which was not captured by today’s data, and the picture deteriorates dramatically, with NAB economists forecasting headline inflation could spike in March to an annual rate of 4.6%.
What would another cash rate hike mean for borrowers?
A further cash rate hike in May, as is predicted by all four big banks, could add an extra $91 a month to a $600,000 debt with 25 years remaining.
Over what would then be three hikes in three meetings, Canstar analysis shows this borrower would see their monthly repayments rise in total by $272 a month.
That’s an estimated increase of 7.4% in just four months – that’s double Australia’s current annual inflation rate, across a much shorter time period.
How many rate hikes can you avoid by haggling?
Canstar analysis shows that if a typical owner-occupier took out a loan five years ago and hasn’t negotiated since, they would be on a variable rate of 6.78%.
If, with $600,000 owning, they knocked 0.50 off their rate, their monthly repayments would drop by $188. This would effectively undo the February and March hikes and save them more than $6,000 in interest over the next two years.
While getting down to 5.75% is unlikely by negotiation alone, refinancing could achieve it. Canstar research shows around 40 lenders are expected to offer at least one variable rate below this mark, potentially saving the borrower as much as $11,205 over two years, even after factoring in $1,150 in switch costs.
The 3 things you can say to help get a decent cut:
- Mention you are considering refinancing: Let them know you’ve been researching lenders and name-drop rates you’ve seen. If they know you’ve done your homework, they should take the request more seriously.
- Ask to speak to the retention team: They are the ones with the authority to hand out bigger discounts.
- If they still don’t budge, ask for a mortgage discharge form: This signals you’re serious about leaving and may prompt them to come back with a better offer.
Canstar data insights director, Sally Tindall, says, “Today’s CPI figures offer little reprieve in the fight against inflation.”
“There’s no calm before the storm, but instead, persistent inflation that is set to spike once the Middle East conflict hits next month’s data, just six days out from the RBA’s next meeting.
“If the RBA ratchets up the cash rate lever for the third time in as many meetings, borrowers will be back to the highest cash rate setting since November 2011.
Full Article: Canstar
Gordon, L. (2026, March 25). Petrol price storm likely case for third rate hike. Canstar - Australia's Original Financial Comparison Site. https://www.canstar.com.au/news/petrol-price-storm-cements-case-for-third-rate-hike/