If you have a variable-rate mortgage, you already know: on Friday 27 March, the banks started charging you more. The Reserve Bank's decision to raise the official cash rate by 25 basis points to 4.1 per cent on 17 March wasn't exactly a surprise, but the market's immediate reaction certainly was.
A typical $600,000 mortgage just became $90 to $100 more expensive per month. That's roughly $1,200 extra per year, every year, for however long you hold that loan. Variable rates are now pushing above 6 per cent for many borrowers, and here's the thing: the RBA is signalling this isn't over yet.
What makes the March decision particularly revealing is that it wasn't unanimous. Five board members voted to raise rates; four voted to hold steady. In plain English, this means the board is genuinely divided about whether hiking rates right now is the right call. The governor has warned of a potential recession if inflation isn't controlled, but that warning itself tells you something important: we're in genuinely uncertain economic territory.
The inflation picture is murkier than the RBA would like. Yes, inflation fell substantially from its 2022 peak, but it picked up again in the second half of 2025. The Middle East conflict has driven fuel prices sharply higher, which adds to inflation if those prices stick around. The board decided the risk of inflation staying above its 2-3 per cent target was too high to ignore.
But here's where policy decisions meet reality. Within days of the rate hike, property market data started screaming distress. Auction clearance rates hit their lowest point of 2026 at 66.6 per cent across the combined capitals. In Sydney alone, the preliminary clearance rate crashed to 60.8 per cent. Leading Sydney auctioneer Tom Panos put it bluntly: "The market has changed. Buyer depth is diminishing. Fear is gripping the market."
That fear is rational. If you're thinking about buying and you just watched your borrowing capacity shrink, you wait. If you're selling, you're suddenly uncertain about what price you'll get. The two forces collide, and transactions dry up.
Now comes the harder question: will there be another rate hike in May? All four major banks—Commonwealth Bank, NAB, Westpac, and ANZ—currently expect the RBA to lift rates another 25 basis points to 4.35 per cent. But the board's split decision suggests the May call is genuinely uncertain. Everything hinges on the first quarter inflation data and what household behaviour tells us about demand.
The honest answer is nobody knows for certain. The RBA is trying to wrestle inflation down without triggering a recession, homeowners are trying to figure out whether their mortgage is still manageable, and the property market is trying to figure out what's fair value in this new world. All of those calculations are happening in real time, and they're still in flux.
For now, if you're on a variable rate, budget for the pain. If you're thinking about buying, waiting might make sense. The RBA's job is controlling inflation, not protecting property prices or household budgets. But the human cost of that inflation control is adding up fast, and the market knows it.