The RBA is at 4.10% - What Two Rate Hikes Mean for Illawarra Buyers Right Now.

On 17 March 2026, the Reserve Bank raised the cash rate by 25 basis points to 4.10% - the second consecutive hike in 2026, following February's increase to 3.85%. The decision was split five to four, which tells you something: there is genuine disagreement at the highest level about where rates are headed.

For buyers searching in the Illawarra right now, here is what this actually means - practically, not in theory.

Your borrowing capacity has dropped again.

Each 25-basis-point increase reduces borrowing capacity by roughly $30,000 to $40,000 on a typical mortgage. Two hikes in two months means that number has moved materially. If you were pre-approved six months ago - when rates were lower following the 2025 cuts - your actual borrowing limit today is likely lower than that approval reflects.

The first thing to do if you have an older pre-approval is update it. Do not make offers or inspect at price points you have not recently confirmed you can actually borrow to.

Variable rates are now pushing above 6% for most borrowers

With variable residential loan rates now broadly in the 5.6% to 6%+ range,e depending on lender and product, monthly repayments have climbed significantly. On a $900,000 loan, the difference between the 3.85% loan rate in mid-2025 and today's rate is several hundred dollars per month.

If you are budgeting for a purchase, model your repayments on current rates, not those from six or twelve months ago. Stress test at 6.5% to give yourself a buffer if there is another hike in May.

What this means for the Illawarra market specifically

The Illawarra has shown consistent resilience across rate cycles. Through the 2022–2023 tightening cycle, 1313 hikes - prices dipped but did not fall sharply -supported by constrained supply and sustained lifestyle demand from Sydney relocators.

The current dynamic is similar. Stock remains tight in the better coastal pockets. Demand from buyers moving out of Sydney has not dried up. The properties that are sitting are generally overpriced relative to current condition,- a, —and they represent a negotiating opportunity for prepared buyers.

The properties that are well-priced and genuinely desirable are still moving. That has not changed.

Is this a reason to wait?

Waiting for rates to fall before buying is a strategy that rarely plays out cleanly. When rates do eventually ease, buyer confidence typically returns quickly, competition picks up, and prices follow. The buyers often find themselves competing harder for the same stock at higher prices.

The more useful question is: can you service the loan at current rates on a property you actually want to own for the next five to ten years? If yes, the rate environment is a factor to model, not a reason to sit out.

What to watch next

The RBA's next meeting is May 4–5. By then, Q1 CPI data will be available. If inflation continues to run above the 2–3% target band, another 25 basis point hike becomes a live possibility. Markets are currently pricing that risk.

The split 5–4 board vote in March signals that the RBA is not on a committed tightening path; that will drive the next decision. If inflation shows signs of easing, the board has room to hold.

The practical takeaway for Illawarra buyers

Update your pre-approval. Model repayments at today's rates. Be clear on your actual ceiling before you inspect. And focus on properties where the vendor is genuinely motivated—because in a higher-rate environment, sitting stock and motivated vendors are where the negotiation opportunities exist.

If you want to talk through how the rate environment affects your specific brief and budget, that is exactly what the initial conversation is for.

Talk through your brief →