The RBA raised the cash rate by 0.25% to 4.35% on 6 May 2026, its third hike of the year. If you are a doctor on a variable rate mortgage, your repayments just went up. If you are planning to buy in the next few months, your borrowing capacity has shrunk again.
What Triggered the Hike
The March quarter CPI came in at 4.6%, well above the RBA's 2-3% target band. Middle East instability has kept fuel and freight costs elevated, and those costs are feeding through to a wider range of goods and services. The Board had little room to hold.
Three hikes in five months is fast by recent standards. Markets are split on whether a fourth is coming, but the cash rate now sits at its highest point since late 2011.
How This Hits Your Loan Right Now
On a standard variable rate, a 25-basis-point increase adds roughly $80-100 per month to repayments on a $500,000 loan. Stack three hikes together and that is $240-300 per month extra compared to where you started the year.
Your lender should have passed on each hike within a few weeks. If you are not sure where your rate sits, check with your broker now. It is also worth checking whether any cashback or honeymoon rate from a 2024 refinance has expired, putting you on a higher margin than you realise.
For those on doctor-specific home loans, the LMI waiver and higher LVR concessions still apply, but the underlying rate you are being charged has moved with the market.
Borrowing Capacity Is Down, But the Competition Gap Has Narrowed
Each 25-basis-point rise reduces maximum borrowing capacity by roughly $25,000 on a typical loan. Three hikes means about $75,000 less borrowing power than six months ago. That is significant if you were budgeting to a specific property price.
The flip side: conditions in Sydney and Melbourne are softening. Auction clearance rates are down, more stock is sitting longer, and buyer competition has eased. For doctors who have been waiting, the combination of lower capacity and lower competition can actually close the gap. If prices pull back 5-10% in your target suburb, that often outweighs the borrowing capacity reduction.
Perth is still running hot, up 7.3% over the March quarter. Anyone chasing yield in Western Australia faces a different calculation.
What Registrars and First-Time Buyers Should Do Now
Borrowing capacity is tighter, but two things have not changed: doctors are still eligible for LMI waivers above the thresholds most borrowers can access, and lenders still assess doctor income differently because of the profession.
Get your pre-approval updated. Many doctors are working off assessments from six months ago that no longer reflect current rates. Lenders now stress-test at a higher serviceability floor, so you need your real number before bidding at auction.
If you are a locum or contractor, the income averaging your lender applies matters more at higher rates. Make sure your income structure is being presented correctly before you apply.
Key Takeaways
- The cash rate is now 4.35%, the third consecutive hike of 2026, driven by CPI at 4.6%
- Variable rate borrowers face roughly $240-300 per month more in repayments than at the start of the year
- Borrowing capacity has fallen by approximately $75,000 across three hikes on a typical loan
- Sydney and Melbourne conditions are softening, which may partially offset the capacity impact for buyers
- Pre-approvals from late 2025 or early 2026 need to be reviewed against current serviceability floors
Talk to a Broker Before Your Next Move
Whether you are refinancing, buying, or just checking if your current rate is still competitive, it is worth a conversation. Voyage Financial works specifically with medical professionals and understands how lending policy applies to your income structure. Book a free call or explore more on our blog.
General Advice Warning: The information in this article is general in nature and does not take into account your individual circumstances, financial situation, or goals. It was accurate at the time of publication and may not reflect current market conditions or legislation. This article should not be relied upon as a substitute for professional financial, legal, or tax advice. Always seek guidance from a licensed adviser before making financial decisions. Where information from third-party sources is referenced, it has been sourced from reputable outlets in good faith, but Voyage Financial cannot guarantee its ongoing accuracy.
