What the big four banks' rate rise announcement means for your variable home loan
All four of Australia’s major banks have confirmed they will pass on the RBA’s 0.25 percentage point rate rise in full to their variable home loan customers. The Reserve Bank raised the cash rate from 4.1% to 4.35% on 5 May 2026, its third consecutive increase.
CBA, NAB, Westpac and ANZ all announced they would match the full increase, following Macquarie Bank which was first to confirm the change. For most variable rate borrowers, higher repayments will kick in from around 22 May. Here is what you need to know.
The rate change
The Reserve Bank of Australia moved the official cash rate from 4.1% to 4.35%, a rise of 0.25 percentage points. This is the third consecutive increase, meaning variable rate borrowers have seen their rates climb significantly over recent months.
Macquarie Bank was first to announce it would pass on the full increase to variable home loan customers, with the change effective from 22 May. The big four followed quickly, with CBA, NAB, Westpac and ANZ all confirming they would also pass on the full 0.25% to customers.
To see exactly how much more you will pay each month, use our loan repayment calculator and enter your current balance at the new rate.
What it costs
On a $600,000 home loan with 25 years remaining, a 0.25% rate increase typically adds around $90 to $100 per month to your repayments. Larger loans and shorter remaining terms will see a different dollar impact.
With three consecutive hikes now in place, the cumulative increase for variable rate borrowers is considerable. RBA Governor Michele Bullock has acknowledged that low-income Australians are bearing the heaviest burden from rising inflation and higher interest costs.
For a full breakdown of how this third hike affects your specific repayments, read our guide on what the RBA’s third rate hike means for your home loan.
Should you fix?
When variable rates rise, many borrowers consider switching to a fixed rate to lock in certainty and avoid further increases. This can be a sensible move in the right circumstances, but it is not always the best choice.
Fixed rate products typically price in expected future rate movements. This means fixed rates are often already elevated by the time variable rates are rising, and the savings may be smaller than you expect. Break costs can also apply if you need to exit a fixed rate loan early.
If you are weighing up your options in the current environment, our article on buying property when interest rates are rising covers the key considerations for borrowers right now.
Your next steps
There are three practical actions worth taking before the rate change takes effect on 22 May.
Budget context
The rate rise comes alongside broad cost-of-living pressure across Australia. Federal Treasurer Jim Chalmers has acknowledged Australians are under serious financial strain, with elevated fuel costs from the ongoing Middle East conflict adding to existing inflationary pressures.
The upcoming federal budget is expected to wind back overall spending rather than add new stimulus. This approach is intended to avoid fuelling inflation further, which remains above the RBA’s target band.
For variable rate borrowers, the combination of rising repayments and higher living costs makes it more important than ever to have a clear view of your financial position and your home loan options.
Common questions
Q: How much will my repayments go up after the May 2026 rate rise?
The exact amount depends on your loan size and remaining term. As a guide, a 0.25% rate rise adds around $90 to $100 per month on a $600,000 loan with 25 years remaining. Use our loan repayment calculator for a precise figure based on your balance.
Q: Did all the big four banks pass on the full 0.25% RBA rate rise?
Yes. CBA, NAB, Westpac and ANZ all confirmed they would pass on the full 0.25% increase to their variable home loan customers. Macquarie Bank announced first. Most changes take effect around 22 May 2026.
Q: Should I switch to a fixed rate now?
It depends on your circumstances. Fixed rates offer repayment certainty but typically price in expected future rate moves, so the savings may not be as significant as you expect. Break costs can also apply if you exit early. A broker can help you model both scenarios before you decide.