Australian mortgage holders are bracing for the possibility of an interest rate increase next week, as indicated by a recent survey involving a panel of economists and financial specialists.

In the Finder Cash Rate Survey, more than half of the 33 participating experts anticipate that the Reserve Bank of Australia (RBA) will be compelled to adjust interest rates upward, driven by a recent spike in inflation. The RBA is set to reveal its decision on the matter this coming Tuesday.

Inflation figures released this week reveal a concerning rise, with the trimmed mean—a key measure of underlying inflation favored by the RBA—climbing to 3.3 percent. In tandem, headline inflation surged to 3.8 percent over the year leading up to December, both figures significantly surpassing the central bank’s target range.

According to the Finder survey, 17 out of the 33 experts, equating to 51 percent, predict the RBA will approve a 0.25 percent increase in the cash rate, elevating it to 3.85 percent.

This marks a significant shift in expectations compared to last December when a mere 9 percent of experts in a similar Finder survey foresaw a rate increase in February.

Graham Cooke, Head of Finder Consumer Research, notes that the majority of economists, alongside the big four banks, are now in favor of a rate hike, underscoring the growing consensus on the need for action to curb inflationary pressures.

“This news will feel like a cold shower for homeowners after a brief reprieve.

“Many who refinanced or entered the market during the 2025 easing cycle may feel blindsided, as the pivot from falling to rising rates in just six months has created significant whiplash.”

Adding to the gloomy outlook, more than four in five experts who weighed in believe a rate cut in the next 12 months is unlikely.

Homeowners on the average home loan of $693,802 will see an annual increase of $1313 to their mortgage repayments if the RBA raises the cash rate by 0.25 per cent next Tuesday.

On a $1 million mortgage, the same hike would cost a homeowner nearly $1893 a year more in interest – a rise of $158.

A rates rise next week would be the first in Australia since November 2023, and would follow the RBA’s easing cycle that brought relief for mortgage holders. 

Cooke says mortgage they should now scrutinise their interest rate with the easing cycle unlikely to restart again soon.

“If your rate isn’t one of the best, now might be a good time to give yourself a rate cut. Many banks will also throw in some cash for your trouble.”

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