Most Australians had a small moment of relief when the RBA lifted rates to 3.85% in February. Then came the part nobody wanted to hear: Governor Michele Bullock signalled that another hike was coming, possibly in May. Your mortgage is about to get worse.
But here's what really hurts. Your wage packet hasn't actually kept up. Wages grew 3.4% in the year to December 2025, which sounds OK until you see the inflation number: 3.8%. Real wages have fallen 0.4%, according to the Australian Bureau of Statistics. In other words, your paycheck is worth less than it was a year ago, and your mortgage payment is about to jump.
Commonwealth Bank economists expect another 25-basis-point rise in May. That means another $91 a month for an average variable-rate borrower on top of what's already happened. For some households, that's the difference between making it and not.
The numbers are brutal. One point two million Australian households are already at risk of mortgage stress, according to Roy Morgan Research. In the six months to January, 12% of mortgage holders missed at least one repayment. These aren't edge cases anymore. These are nurses, teachers, tradies working full-time and still falling behind.
Consumer confidence fell 2.6% in February after the rate announcement. Household spending growth slowed to 5.0% annually, the weakest in four months. People are pulling back. They're worried. And they should be. Property clearance rates have cooled to 50-70% across major capitals. Buyers are vanishing. Sellers are desperate.
Here's the thing: the RBA's job is fighting inflation, not protecting your mortgage. Governor Bullock is right to keep all options on the table, including rate rises if inflation stays sticky. The problem is the gap between wage growth and cost-of-living increases isn't something monetary policy can fix alone. Job growth was only 14,000 in March on a workforce of 13 million. That's weak. Unemployment is steady at 4.1%, which looks good, but steady employment with falling real wages is a trap.
The March RBA meeting will likely be a pause. But May's almost certainly a hike. And that's before the next round of cost-of-living pressures from rising energy, groceries, and rent. In plain English, your mortgage is about to get worse, your paycheck isn't keeping up, and the RBA knows it but sees no better options right now.