The Reserve Bank of Australia (RBA) has increased the official cash rate by 0.25% to 3.85% in its first policy meeting of 2026. While this move comes amid persistent inflation, it also presents opportunities for buyers, sellers, and homeowners to make informed decisions in today’s property market.

Why This Matters

Data from the Australian Bureau of Statistics shows that trimmed mean inflation rose slightly to 3.3% in December 2025. The RBA’s decision aims to keep the economy balanced, supporting sustainable growth in property values and lending. For households, this means understanding the changes and planning strategically is more important than ever.

Impact on Homeowners

Homeowners with variable-rate mortgages may see repayments increase by around $90–$100 per month on a $600,000 loan. However, this also provides a chance to review loan structures, negotiate with lenders, or explore refinancing options to secure the best possible rates. Fixed-rate borrowers are not immediately affected, but those rolling off their fixed terms later this year may face higher repayments.

Opportunities for Buyers

Higher interest rates slightly reduce borrowing capacity, but strong demand remains in cities such as Perth, Brisbane, and Darwin. Strategic buyers can still find great opportunities, often facing less competition than at the peak of the market. Understanding your borrowing power now can position you to make smart decisions for the future.

Advice for Sellers

Tight housing supply continues to support property values, and well-presented, accurately priced homes are attracting strong interest. Now is an excellent time to showcase your property to motivated buyers and take advantage of current market conditions.

What Renters Should Know

Rents are not immediately affected by interest rate changes, but higher mortgage costs for some landlords and reduced buying activity can keep the rental market competitive. For renters considering buying, exploring options now could position them for future savings as markets adjust.

Key Takeaway

While interest rates may remain elevated for some time, understanding your options allows you to turn these changes into an advantage. At Sanctuary Real Estate, we guide clients through every step, from understanding borrowing power to making properties stand out in a competitive market. With the right advice and proactive planning, today’s rate changes can be an opportunity rather than a challenge.

Sources: Reserve Bank of Australia, Australian Bureau of Statistics