RBA Rate Hike February 2026: What Property Investors Need to Know Now

Why Did the RBA Raise Interest Rates?

The RBA's decision comes down to one thing: inflation is still too high.

Australia's recent inflation data shows:

• Consumer Price Index (CPI) rose 3.8% over 12 months to December 2025
• Trimmed mean inflation sitting at 3.3%
• Both figures well above the RBA's target range of 2-3%

RBA Governor Michele Bullock made it clear: "The path for inflation was tracking higher for longer than previously thought. The board now thinks it will take longer for inflation to return to target, and this is not an acceptable outcome."

When inflation stays elevated, the RBA raises interest rates to cool consumer spending and bring prices back under control.

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What Does 25 Basis Points Actually Cost You?

While 25 basis points sounds small, the impact is real for property owners and investors.

Monthly repayment increases for typical home loans:

• Sydney: up $156 per month
• Brisbane: up $130 per month
• Perth: up $120 per month
• Melbourne: up $107 per month
• Adelaide: up $115 per month

For investors with multiple properties, these increases compound quickly. Three investment properties could see total monthly repayments rise by $400-$500 or more.

Why This Rate Rise May Actually Help Property Investors

Here's what many analysts miss: rising rates create market conditions that can benefit strategic, well-prepared investors.

Rising rates tend to:

• Reduce speculative buyers and competition at auctions
• Slow new construction activity as projects become less viable
• Tighten rental markets as fewer people can qualify to buy
• Push more households into the rental market
• Improve rental yields as supply constraints worsen

In other words: Supply doesn't improve just because rates go up. In fact, it often gets worse, which supports continued price growth and rental demand.

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The Bigger Problem: Borrowing Capacity Drops

The most significant impact isn't the monthly repayment increase. It's what happens to your borrowing capacity.

Key impact: A 25 basis point rate rise typically reduces borrowing capacity by $15,000-$20,000 for the average borrower.

This means buyers who were just scraping into their target suburb or investment property may now be completely priced out of the market. For first-time investors, this creates an immediate barrier to entry.

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Why Property Prices Keep Rising Despite Higher Rates

Many people assume rising interest rates automatically mean falling property prices. However, Australia's property market doesn't work that simply right now.

The reality: Even when rates rose 13-14 times during the previous hiking cycle, property prices in many areas continued climbing. 

Here’s why prices keep rising:

• Australia faces a critical housing supply deficit
• Not enough properties to meet population demand
• Six capital cities now have median house prices above $1 million
• Brisbane and Perth have seen double-digit annual growth despite elevated rates
• Inflation reduces the real value of debt over time, benefiting property owners

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The Hidden Cost of Waiting for Rate Cuts

The most painful place to be right now is waiting for the "perfect" time to buy. 

Here's what happens:

• Your borrowing capacity drops with each rate rise
• Property prices keep climbing due to supply constraints
• The gap between what you can afford and actual prices widens
• You need to wait months or years for rate cuts before you can enter the market
• By the time rates fall, prices have climbed even higher

The reality: Time in the market consistently beats timing the market perfectly.

While property owners build equity through capital growth, those waiting on the sidelines see their deposit savings lose purchasing power to both inflation and rising property values.

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What Happens Next in 2026?

Based on Governor Bullock's statements:

• March 2026 meeting unlikely to see further changes
• Next major decision after May 2026 quarterly inflation data
• Window remains open for additional rate hikes if inflation doesn't moderate
• RBA committed to bringing inflation back to 2-3% target

Most economists expect a pause after February to assess the impact. However, if inflation remains high, further rate rises later in 2026 are possible.

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How Property Investors Should Respond

Successful investors don't panic or freeze. They adjust their strategy:

If you already own property:

• Review cash flow and ensure buffers for potential further rises
• Consider fixing a portion of debt if on variable rates
• Hold quality assets through the cycle
• Remember portfolios grow through full market cycles, not individual quarters

If you're looking to buy:

• Understand that waiting often costs more than buying now
• Get pre-approval to understand your current borrowing capacity
• Focus on properties with strong capital growth fundamentals
• Act while you still have borrowing capacity

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The Strategy That Works Regardless of Rates

Property investors who've built wealth over the past decade did it by:

• Purchasing in markets with strong supply-demand fundamentals
• Holding through rate cycles rather than timing markets
• Using equity strategically to scale portfolios
• Focusing on long-term capital growth over short-term movements
• Maintaining buffers to weather rate rises

Well-selected investment properties consistently deliver 8-11% annual growth across full market cycles, regardless of short-term rate movements.

The Fundamental Truth About Building Wealth

Most Australian wealth has been built through property ownership, not by waiting for perfect conditions.

Consider this reality:

• Someone who bought property in 2022 at the rate peak has likely seen significant capital growth despite higher rates
• Someone who waited for rates to fall missed equity growth that far exceeds interest savings
• Strategic property investors continue building wealth across all rate cycles

The key is having a clear strategy aligned with long-term wealth goals, not reacting emotionally to short-term rate changes.

Don't Get Left Behind

The February 2026 rate rise changes the landscape immediately. Every month of delay potentially means:

• Lower borrowing capacity if rates rise again
• Higher property prices as growth continues
• Missed capital growth opportunities
• Longer timeline to build your portfolio

Winners in property investment don't wait for perfect conditions. They take consistent action with the right strategy.

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Build Your Property Portfolio with Confidence

At Search Property, we help Australians create data-driven property investment strategies aligned with long-term wealth goals. Whether rates rise, fall, or stay steady, the right strategy with conservative planning makes all the difference. Book a FREE investment assessment with Search Property. We’ll discuss your goals and position, and help you build a clear plan to move forward with confidence.