Interest Rates • RBA • Mortgage Strategy
RBA Minutes Hint Rates May Need To Go Higher — What It Could Mean For Melbourne Borrowers
Fresh RBA minutes show the Bank is questioning whether policy is still “restrictive” — and the majors are broadly tipping at least one more hike in 2026. If you’ve got a mortgage (or you’re about to), May just became the month to watch.
The quick take (no economist-speak)
- The RBA is less convinced rates are “doing the job”. The minutes note several indicators suggesting policy may no longer be restrictive.
- Inflation is looking broader, not just a few problem items. The RBA points to a sharp rise in the share of CPI items growing above ~2.5% annualised.
- Credit growth is picking up. Housing credit growth has lifted (investor-driven), and business debt growth is described as the fastest since the GFC.
- May is shaping up as the next big decision point. Markets and media focus is building around May after the February reassessment.
Source: RBA Minutes (Meeting held 2–3 Feb 2026; minutes released 17 Feb 2026).
What the RBA minutes actually said (and why it matters)
The key change is tone: the Board debated whether the current stance is still restrictive, and noted there was “even less evidence than at the December meeting” that financial conditions remained restrictive.
Standout line: “Several indicators suggested that monetary policy was no longer restrictive.”
The minutes point to a noticeable pick-up in housing credit (especially investor credit), business debt growing at its fastest pace since the GFC, and low risk premia in capital markets supporting favourable financing conditions.
They also acknowledge the household pinch: required mortgage repayments as a share of disposable income are above historical average, and borrowers are still building buffers via offset/redraw. But the Board questioned whether that buffer-building reflects “restrictive policy”… or just stronger incomes that could later be spent (and re-ignite demand).
Why May is being talked about: inflation + labour + demand
The RBA’s concern isn’t just that inflation is elevated — it’s that it’s looking broad-based and linked to capacity pressure. The minutes highlight stronger-than-expected outcomes through the second half of 2025, and note inflation had “clearly now exceeded the 2–3 per cent target range”.
On the labour market, the minutes point to the unemployment rate being lower than expected, underemployment being historically low, and ongoing strength in unit labour costs — consistent with underlying inflation pressure building over the previous six months.
Add stronger-than-expected private demand (including consumption resilience) and you get the “why” behind commentary that another hike could land later in the year — with May often flagged as the next realistic window after key data drops.
What this could mean for your mortgage (practical moves)
If another hike lands, it’s usually not the “25 bps” that hurts most — it’s the cumulative squeeze, plus lenders quietly tightening serviceability and pricing along the way.
If you’re on variable
- Review your offset/redraw strategy: keep buffers useful, not just “pretty”.
- Check your rate vs the market: many borrowers drift onto uncompetitive pricing over time.
- Consider whether splitting (part fixed / part variable) fits your risk tolerance.
If you’re buying soon
- Get pre-approval sorted early, especially if your borrowing capacity is tight.
- Stress-test repayments above today’s rate (because lenders will).
- If you’re competing in Melbourne, speed and clean docs can be the difference between “won it” and “missed it”.
Note: This is general information only and doesn’t consider your personal situation.
Want a “May-ready” rate check before the noise gets louder?
If you want, we can run a quick mortgage review: current rate, lender discounts, refinance options, and how a potential move could impact repayments and borrowing power. No drama — just clarity.
Sources
- Reserve Bank of Australia – Minutes of the Monetary Policy Board Meeting (3 Feb 2026; meeting held 2–3 Feb 2026) View
- Reserve Bank of Australia – Statement on Monetary Policy (February 2026) View
- RBA – Schedule (confirming May 2026 meeting dates) View
- News coverage – “RBA signals more rate rises possible…” View