Cash rate forecast: Will your mortgage go up again in September?

2026 has already seen three consecutive RBA rate hikes, taking the cash rate back to 4.35%. With cost-of-living pressures and mortgage repayments already weighing on household budgets, borrowers are hoping the next move will be a cut. But stubborn inflation and resilient spending have put another hike on the table. Will the RBA raise rates again in September?

A rate rise is now looking more likely than not. The debate among economists is no longer simply about whether rates will rise, but when.

The RBA's primary job is to keep inflation within its 2–3% target range. But inflation remains above target, and some of the latest data suggest it is not falling fast enough.

Underlying inflation remains at 3.6%. Headline inflation eased slightly to 3.5% in July, but trimmed mean inflation, the RBA's preferred measure of underlying price pressures, remained at 3.6%. This suggests inflation is still proving difficult to bring down.

Household spending remains strong. Household spending increased by 1.1% in July, considerably more than economists had expected. Strong consumer demand can make it harder for inflation to fall, particularly when businesses are still facing higher costs.

AI investment is adding to demand. The rapid expansion of artificial intelligence infrastructure and data centres is creating another source of demand for construction, electricity, materials and skilled workers. The RBA has flagged the scale of this investment as a potential source of additional inflationary pressure. UBS has also pointed to the global AI investment boom as a growing inflation risk.

Together, these factors strengthen the case for the RBA to act sooner rather than later.

NAB, Deutsche Bank and UBS are among the banks expecting a 25-basis-point hike at the September meeting, taking the cash rate to 4.60%.

Not everyone expects the RBA to move this month.

CBA and ANZ also expect the cash rate to eventually reach 4.60%, but both are tipping a November hike rather than a September increase.

One reason is timing. By the November meeting, the RBA will have the latest quarterly inflation data, giving it another important piece of evidence before deciding whether another hike is necessary.

That doesn't mean September is off the table.

Both banks recognise that stronger-than-expected economic data could prompt the RBA to act earlier. The September meeting therefore remains a genuine risk for borrowers.

Westpac is the only Big Four bank currently forecasting no further rate hikes in 2026. However, its economists acknowledge that the risk of a November hike has increased following the latest inflation data. They do not see a November hike as their base case yet.

Westpac is placing more weight on signs that the economy and labour market are cooling. Its latest labour market analysis says employment fell in July and the unemployment rate rose to 4.5%, pointing to increasing slack in the labour market.

Wage growth is also easing. Westpac's latest Wage Price Index analysis puts annual wage growth at 3.2% in the June quarter, with private-sector wage growth continuing to slow.

So Westpac's argument is not that another hike is impossible. Rather, it believes the RBA should give existing rate settings more time to work before raising rates again.

(International investment banks UBS and Deutsche Bank have also joined NAB in calling for a hike on 29 September.)

If you're hoping for rate cuts to ease the pressure on your mortgage, you may have to wait until the second half of 2027.

The RBA has already changed direction once. After cutting rates three times in 2025, it raised them three times in 2026 as inflation proved harder to bring down than expected.

That means the RBA is likely to be careful about cutting rates again. It will want to see inflation coming down steadily before it starts easing rates.

Westpac currently expects the first rate cut in August 2027, followed by another in December. That would bring the cash rate down to 3.85% by the end of 2027.

But this is only a forecast. The timing could change depending on what happens with inflation and the economy.

And if NAB, CBA or ANZ are right and the RBA raises the cash rate to 4.60% later this year, borrowers could be dealing with higher rates for even longer.

The main takeaway is simple: don't wait for a rate cut to look for savings on your mortgage.

If your household budget is already feeling the pressure, check whether your home loan is still competitive. A better mortgage rate could reduce your repayments and interest costs even while the cash rate remains high.

And don't assume your bank is giving you its best rate just because you've been a loyal customer. Don't pay a loyalty tax.

Regularly checking your home loan can help you spot when your deal is no longer competitive and decide whether it's worth negotiating with your current lender or looking elsewhere.

If the RBA pulls the trigger on 29 September, history shows the major banks will pass the full 0.25% increase on to variable loans within two to three weeks.

Here is what that adds to principal-and-interest repayments on a 25-year mortgage (assuming an average existing variable rate of 6.50% climbing to 6.75%):

On an average $600,000 mortgage, that is another $94 every month carved straight out of after-tax income, on top of all the rate rises households have absorbed since the hiking cycle began.

You cannot influence the RBA's decision, but you don't have to simply accept the rate your lender gives you.

Banks often offer sharper rates to attract new customers, while existing borrowers can end up paying more.

Check your current rate and compare it with what your lender is offering new borrowers. If there is a big gap, ask your lender to review your rate before you consider refinancing.

You don't necessarily need to refinance to get a better deal. A quick call to your lender could be enough.

You can keep it simple:

“I'm currently paying [your rate], but I can see you're offering lower rates to new customers. Can you review my loan and offer me a more competitive rate?”

If they can't offer you a better deal, that's when it may be worth comparing what other lenders are offering.

If you have an offset account, keeping your spare cash there can reduce the amount of your loan that attracts interest.

The more you keep in your offset, the less interest you pay while still having access to your money when you need it. But make sure to check if your offset account is actually working as it should.