Interest rates are back up. Here is what it means for you
The Reserve Bank has announced another 0.25% rate increase on the 17th of March, making it the second rise for 2026. After last year’s cuts gave many households a bit of breathing room, this is a reminder that interest rates can turn quickly, and when they do, everyday budgets usually feel it fast.
If that feels a bit rough right now, it is probably because it is not just rates putting pressure on people. Fuel prices are climbing again too, with petrol back above $2 a litre in many areas and some cities seeing prices well over $2.20.
A rate hike on already stretched household finances is tough!
So let’s unpack the rate rise and what it means for you.
The ‘cash rate’ is the interest rate set by the Reserve Bank of Australia, and it helps influence what banks charge on home loans and what they offer on savings accounts. When the cash rate goes up, borrowing money gets more expensive. The goal is to slow spending and help keep inflation under control.
That might sound a bit technical, but the impact is pretty simple. If you have a mortgage, especially a variable one, your repayments could go up if your bank passes the increase on. If you are renting, you might still feel the pressure through higher living costs. And if you have savings, you might see a slightly better rate, although banks are often quicker to lift loan rates than savings rates.
Why does 0.25% matter?
Because even a small increase can add up.
As a rough guide, a 0.25% rise could mean around $80 a month extra on a $500,000 loan, about $120 extra on a $750,000 loan, and roughly $160 extra on a $1 million loan.
That is real money. And when it lands on top of groceries, bills and fuel, it can start to feel like a lot. So it’s a good time to tighten a few things up. That could mean trimming spending that has crept up, reviewing subscriptions, or building a bit more wiggle room into your budget.
When budgets are under pressure, something usually has to give. The key is making sure it is not your long-term goals. If you need to pull back, look for easy ways to stay in the game, like using Raiz Round-Ups or Raiz Rewards to keep investing little by little. It is a simple way to keep momentum going, even when things feel tight.
Don’t have the Raiz App?
Download it for free in the App store or the Webapp below:
Important Information
This blog has been issued by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) as Responsible Entity of the Raiz Invest Australia Fund (ARSN 607 533 022) and has been prepared without taking into account your objectives, financial situation or needs. Before acting on such information, you should conduct your own review or consult a financial advisor before making a decision to invest. Please read the relevant Product Disclosure Statement and any associated reference documents before making an investment decision. In accordance with the Design and Distributions Obligations, we maintain Target Market Determinations for our Funds. All documents can be found on the Raiz website www.raizinvest.com.au, or calling the Customer Support team on 1300 754 748. Please note that past performance is not a reliable indicator or guarantee of future performance. Historical returns, forecasts, and market commentary are provided for general informational purposes only. All investment carries risk and may result in loss of capital.
