Buying ASX shares or paying off a mortgage? Here’s what the experts are saying about RBA interest rate hikes in 2026

As I imagine you’re aware by now, yesterday ASX investors and mortgage holders alike learned that interest rates Down Under are heading higher.

Again.

In afternoon trade on Tuesday, the Reserve Bank of Australia (RBA) announced a 0.25% increase in the cash rate target amid concerns over rising inflation. That’s partly due to ongoing strong domestic demand and partly driven by the global energy price spike amid the war in Iran.

This sees Australia’s official interest rate back up at 4.10%.

And it represents the second rate increase by the Aussie central bank in 2026, with the RBA also having hiked by 0.25% at its 3 February meeting.

Investors were not deterred, however. With the market having widely priced in another rate increase, the All Ordinaries Index (ASX: XAO) closed up 0.3% on Tuesday.

Now, here’s what the experts are saying about RBA interest rate hikes in 2026.

RBA triggers second interest rate increase in 2026

Commenting on Tuesday’s interest rate hike, eToro market analyst Josh Gilbert said:

This is clearly not a hike the RBA wanted to make, but with the board itself acknowledging inflation risks have tilted further to the upside, along with petrol prices climbing by the week, the board has been backed into a corner.

Geopolitical tensions didn’t create Australia’s present inflation problem, but they have certainly exacerbated it.

Gilbert added that households will find this a “bitter pill to swallow”. He noted:

Mortgage repayments are going up at the same time fuel and grocery bills are surging, and that squeeze is going to hit hard and fast. The rate relief many were counting on this year doesn’t just seem to be delayed, it looks to have disappeared.

As for what mortgage holders and ASX investors can expect from interest rates over the remainder of the year, Gilbert concluded:

If oil stays elevated, the view that another hike is on the table will only gain momentum… If the situation in the Middle East resolves and crude comes back to earth, today’s hike could be the last we see. Right now, though, that feels like wishful thinking rather than the base case.

Filip Tortevski, senior analyst at Wealth Within highlighted the risks the RBA is facing as it tightens in the current environment.

Tortevski said:

Higher rates can slow spending and economic activity, but they do little to directly control the price of oil. That leaves the RBA walking a fine line, trying to contain inflation without pushing an already fragile economy into a deeper slowdown

How much more will mortgage holders pay?

David Koch, economic director at Compare the Market, noted that the RBA’s 0.25% interest rate hike could add $116 to monthly repayments for a homeowner with a loan of $736,000. That’s $1,392 more a year.

“Nobody wants another rate hike – we’ve already had one this year – and that means millions of homeowners are spending thousands more on their repayments,” he said.

“But inflation is a prickly issue and that means it’s not one we can sit on. Every month we wait to act could be precious time lost in the fight against more expensive groceries, power bills and insurances,” Koch noted.

As for the prospect of further interest rate increases in 2026, Koch said:

There’s no meeting in April, but the RBA sits again in May and another six times this year. I don’t think we’re out of the woods yet…

I encourage homeowners to prepare for the possibility of more hikes this year. That means knowing your rate, and doing some leg work to make sure you’re not paying more than you need to.

The post Buying ASX shares or paying off a mortgage? Here’s what the experts are saying about RBA interest rate hikes in 2026 appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.