The Reserve Bank of Australia raised the cash rate by 25 basis points on Tuesday, lifting it to 4.10 per cent. It's the second consecutive hike in as many months, following February's rise that ended three cuts we had been enjoying through late 2025.
This one was close. Five board members voted for the hike. Four voted to hold. That split tells you something important about where we are: the RBA isn't hiking with confidence, it's hiking reluctantly.
So why did they do it?
Two words: Middle East.
The outbreak of conflict on February 28 sent oil prices surging from around US$70 a barrel to a peak of US$116 last week. Petrol prices in Australia have spiked sharply as a result, and the RBA is worried that fuel costs will push headline inflation back above 5 per cent in the next quarter.
Headline inflation is currently running at 3.8 per cent annually. The RBA wants it at 2.5 per cent. That gap, now widened by global fuel costs, is what tipped the board over the line.
NAB economists warned last week that if the conflict isn't resolved quickly, fuel alone could add a full percentage point to inflation. Treasury arrived at a similar number. When your economists and your regulators are on the same page, the RBA tends to act.
What does this mean for your mortgage?
If you're on a variable rate, you'll feel this one quickly. The major banks have already confirmed they'll pass on the full 0.25 per cent increase. ANZ moved on fixed rates before the decision even landed. Macquarie confirmed variable home loan rate increases from 2 April.
For a doctor with a $1.5 million mortgage, a 0.25 per cent hike adds roughly $312 to your monthly repayments. On top of February's hike, that's around $625 extra per month compared to January.
That's not trivial, even on a specialist's income.
The bigger picture for property investors
Here's what matters strategically: this rate environment is compressing borrowing capacity across the board. Banks calculate what you can borrow using a serviceability buffer of 3 per cent above your actual rate. At 4.10 per cent, that buffer sits at 7.10 per cent.
That buffer existed at 5.85 per cent in mid-2023. The compression since then has been significant.
For doctors looking to add to a portfolio, this narrows your purchasing power relative to 12 months ago. But it also narrows it for every other buyer in the market, which is partly why Sydney and Melbourne values have been flatlining while demand in mid-sized capitals like Adelaide and Perth remains firm.
Supply hasn't improved. The structural shortage of housing in locations Australians actually want to live in is unchanged. Values in undersupplied markets are still trending upward, just at a more measured pace than 2024.
What doctors are in a different position to most buyers
If you're a medical professional, two things work in your favour right now that most borrowers don't have access to.
First, lenders who specialise in medico lending can still access waived LMI up to 95 per cent LVR for eligible doctors. That means you can enter the market or expand a portfolio without locking up large amounts of capital in a deposit. That flexibility matters in a rising-rate environment.
Second, your income trajectory is assessed differently. If you're a GP with growing billings, a registrar approaching fellowship, or a specialist with mixed fee structures, a broker who understands medico income can present your serviceability in a way a standard bank assessment often misses. That can make a meaningful difference to what you can actually borrow.
Three practical things to do now
Review your current rate. With two hikes in two months, now is the time to check whether your existing rate is still competitive. A refinance won't always win in this environment, but it's worth knowing your position.
If you're in the market to buy, don't let rate noise put you off good assets. Rates can change faster than quality property becomes available. The fundamentals of supply shortage haven't shifted.
If you have a fixed rate expiring in the next six to twelve months, start planning now. Rolling off a 2024-era fixed rate onto today's variable rate will be a significant jump. Knowing your options ahead of time, rather than after the rollover, puts you in a much better negotiating position.
Will the RBA hike again?
The board's split vote suggests they're not on autopilot. Much will depend on how long the Middle East conflict continues and whether oil prices stabilise. If fuel costs ease over the next six to eight weeks, the case for another hike in May weakens considerably.
But the governor's comments after Tuesday's decision were clear: inflation is the priority, and they will act again if the data demands it.
Stay close to the numbers between now and May.
Questions about how this affects your situation? Book a free call with Voyage Financial.