RBA Interest Rate Decision March 2026: What It Means for Your Mortgage & Savings
Analysis of the RBA's March 2026 interest rate decision — impact on mortgage repayments, savings accounts, borrowing power, and what to expect for the rest of the year.
Where the RBA cash rate stands in March 2026
The Reserve Bank of Australia has held the cash rate at 4.10% at its March 2026 meeting, following the 25 basis point cut delivered in February — the first reduction since the pandemic-era easing cycle ended. The February cut took the cash rate from 4.35% (where it had been held since November 2023) to 4.10%, and the March hold was widely expected as the RBA signalled it would take a cautious, data-dependent approach to further easing. Governor Michele Bullock emphasised that while inflation is returning to the target band, the board wants to see further evidence that underlying price pressures are sustainably easing before delivering additional cuts. The March Statement on Monetary Policy revised the RBA's inflation forecast slightly lower, projecting trimmed mean inflation to return to 2.5% by mid-2027, and GDP growth to pick up gradually through 2026 as the effects of prior rate rises continue to fade. The labour market remains resilient, with unemployment at 4.2% — strong enough to prevent the RBA from cutting aggressively but not so strong as to generate wage-driven inflation concerns.
What this means for your mortgage repayments
The February 2026 rate cut has already flowed through to most variable rate mortgages, with the major banks passing on the full 25 basis points. If your lender has reduced your rate, your repayments will have decreased. On a $500,000 variable rate mortgage, a 25bp cut reduces monthly repayments by approximately $79 (from around $3,292 to $3,213 at current rates). On a $700,000 mortgage, the monthly saving is around $110. On a $1,000,000 mortgage, it is roughly $158 per month. Over a full year, these savings range from $948 to $1,896 depending on your loan size. If you were already ahead on repayments or had a redraw balance, the rate cut means a larger portion of each repayment goes toward reducing your principal. One of the smartest moves you can make is to keep your repayments at the old, higher level even after the rate cut takes effect. The difference goes directly to paying down your loan faster, and because interest compounds daily, even modest extra payments have an outsized impact over the life of a 25 to 30 year loan. Check your lender's new rate on their website and compare it against competitors — the rate cut is also a good prompt to review whether you are on the best deal available.
Impact on savings account rates
The flip side of a rate cut for mortgage holders is lower returns for savers. Most banks have reduced their savings account rates by 15 to 25 basis points following the February cut, though competition for deposits means some have held rates longer than others. The best high-interest savings accounts are now offering around 5.0 to 5.25% (down from 5.35 to 5.50% pre-cut), typically with conditions like making a monthly deposit of $1,000 or more and no withdrawals. Term deposits have also adjusted downward, with 12-month term deposit rates falling to around 4.5 to 4.8% from the 5.0 to 5.2% range available in late 2025. If you have significant cash savings and believe further rate cuts are coming, locking in a term deposit now could be a smart move — you secure today's rate for the fixed term, even if rates fall further. A 12-month term deposit at 4.7% on $50,000 would earn $2,350 in interest, compared to potentially less if savings rates drop another 50 basis points over that period. However, the trade-off is liquidity — if you need access to the funds, a high-interest savings account with a slightly lower rate but full flexibility may be more appropriate. Consider splitting your cash across both approaches to balance return and access.
How rate cuts affect your borrowing power
Interest rate reductions directly improve how much you can borrow, because lenders assess your ability to service a loan at the proposed rate plus a buffer (typically 3 percentage points). When rates fall, the assessment rate falls too, allowing you to qualify for a larger loan on the same income. A single 25bp cut typically increases borrowing capacity by $10,000 to $15,000 for a household earning $120,000 combined. If the RBA delivers a total of 75bp in cuts through 2026 (taking the cash rate to 3.60%), borrowing capacity for that same household could increase by $30,000 to $45,000 compared to the peak-rate scenario. This is meaningful for first home buyers on the margin of affording their target property, and for upgraders looking to access a higher price bracket. However, be cautious about borrowing to your maximum capacity based on anticipated rate cuts that have not yet occurred — the RBA has made no commitment to further cuts, and borrowing decisions should be based on current rates, not forecasts. Use our Borrowing Power Calculator to model your capacity at different rate levels, and our Mortgage Calculator to see what repayments look like across a range of scenarios.
Fixed vs variable: which is better right now?
With the rate cutting cycle potentially underway, the fixed vs variable question is front of mind for many borrowers. As of March 2026, variable rates from major lenders are around 6.1 to 6.4%, while 2-year fixed rates are available from around 5.4 to 5.7% and 3-year fixed rates from 5.2 to 5.5%. Fixed rates are lower than variable because they already price in expected future rate cuts — the market is essentially betting that the cash rate will fall further, and lenders have built that into their fixed pricing. If the RBA delivers 50 to 75bp of additional cuts, variable rates could fall to 5.5 to 5.7% — roughly in line with or slightly above current fixed rates. In that scenario, you would be broadly similar on either option. However, if the RBA cuts more aggressively (say 100bp or more total), staying variable would leave you better off as your rate falls with each cut. Conversely, if inflation re-accelerates and the RBA pauses or reverses cuts, a fixed rate protects you from further increases. A popular middle-ground strategy is to split your loan — fix a portion (say 50 to 60%) to lock in certainty, and leave the rest variable to benefit from further cuts and maintain offset account functionality. There is no universally correct answer; it depends on your risk tolerance, cash flow needs, and view on the economic outlook.
What to expect from the RBA for the rest of 2026
Market pricing as of March 2026 suggests the RBA will deliver two to three additional 25bp cuts through the rest of the year, taking the cash rate to somewhere between 3.35% and 3.60% by December. However, this is a forecast, not a guarantee, and the RBA has repeatedly stressed it is not on a pre-set path. The key variables that will determine the pace and extent of further cuts include the trajectory of trimmed mean inflation (the RBA wants to see it sustainably within the 2 to 3% band), wage growth (currently around 3.5% annually — acceptable but being watched), the unemployment rate (any meaningful rise above 4.5% would strengthen the case for faster cuts), and global developments including oil prices, the US economy, and China. The RBA meets eight times per year, with the next decisions scheduled for May, June, August, September, November, and December. The May meeting will be particularly important as it follows the March quarter CPI release and the federal Budget — both of which will significantly inform the board's assessment. For homeowners and borrowers, the practical advice is to plan for a scenario where rates fall by 50 to 75bp total in 2026, but be financially comfortable if they do not fall further from here.
Action steps: what to do with your finances now
Regardless of what the RBA does next, there are several concrete steps you can take right now to optimise your financial position. For mortgage holders: review your rate with your lender and ask for a better deal — the threat of refinancing is a powerful negotiating tool, and most lenders have retention teams offering discounts of 0.2 to 0.5% for loyal customers. If your lender will not budge, consider refinancing — the cost of switching (typically $500 to $1,000 in discharge fees and settlement costs) is quickly recouped if you can save even 0.3% on your rate. Keep repayments at the pre-cut level to accelerate your loan payoff. For savers: compare your savings account rate against the market and switch if you are below the best available rate — loyalty does not pay in savings accounts. Consider a term deposit for funds you will not need for 6 to 12 months. For investors: rate cuts are generally positive for share markets (lower borrowing costs boost corporate earnings) and property prices (improved affordability increases demand), so review your portfolio allocation in light of the changing rate environment. For everyone: use the breathing room from lower rates and fuel costs to shore up your financial foundations — emergency fund, debt reduction, insurance review, and super check.
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General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.
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