What the latest cash rate news means for you

What the latest cash rate news means for you

The Reserve Bank of Australia (RBA) raised the cash rate to 4.35% at its May meeting – the third increase this year and a clear signal that the fight against inflation is far from over.

Headline inflation rose 4.6% in the 12 months to March 2026, according to the Australian Bureau of Statistics, up sharply from 3.7% in February. The biggest contributors were transport, up 8.9%, driven by a 24.2% surge in automotive fuel, and housing, up 6.5%, with electricity costs rising 25.4% and rents up 3.7%.

The RBA's preferred measure, trimmed mean – which strips out volatile price movements – held steady at 3.3%, still well above the 2–3% target band. In other words, underlying inflation isn't being driven solely by fuel prices. Price pressures are broad-based, which is a key reason why the RBA is unlikely to ease off quickly.

For borrowers, the cumulative effect of three rate rises in 2026 is significant. According to Canstar, each 25 basis point increase adds roughly $90–$150 per month to repayments on a $600,000–$1 million home loan. With three rises now locked in, now is a good time to review your position and make sure your loan structure is still working for you.

The pressure is being felt across the economy. While higher fuel prices and interest rate rises are expected to slow spending, the RBA's focus remains squarely on bringing inflation back under control, and further moves cannot be ruled out.

For those with property plans – whether buying, investing or developing – this environment demands a more strategic approach to finance. In the current environment, the focus should not only be on the interest rate itself, but whether your overall lending structure is giving you flexibility, liquidity and control as market conditions continue to evolve.

How to structure finance when purchasing property with family, friends or business partners

Co-buying property is becoming increasingly common in Australia – whether to enter the market sooner or to build a portfolio together. However, shared property ownership comes with important financial and legal considerations, and how you structure things from the outset can have a significant impact on flexibility, risk and future outcomes.

One of the first considerations is ownership structure. Buyers engaged in shared property ownership typically choose between joint tenants and tenants in common. Joint tenants means equal ownership, while tenants in common allows defined shares that can reflect different financial contributions.

Another option for co-buying property is a trust structure, where a trustee holds the property on behalf of beneficiaries. This can offer flexibility in income distribution and ownership, though lending is often more complex and subject to additional requirements.

From a lending perspective, most lenders assess all borrowers collectively, meaning each person is generally responsible for the full home loan. If one party cannot meet repayments, the others may need to step in. Lenders will assess each borrower's income, liabilities and credit profile when determining borrowing capacity.

It's also important to consider how contributions are managed and to document this clearly. Many co-buyers put a legal agreement in place covering responsibilities, exit strategies and what happens if circumstances change.

Finally, think about future flexibility. Will one party want to buy the other out, or could the property become an investment? Structuring the loan with features such as offset accounts or split facilities can provide greater control over time.

The right structure for co-buying property depends on your relationship, financial position and long-term plans. Getting legal and finance advice early can help avoid issues later.

Whether you're reviewing existing lending, planning your next acquisition or navigating a changing rate environment, 3LANE Finance can help structure the right solution for your circumstances.

FAQs

Will my bank automatically raise my rate following the RBA decision?

Most lenders pass on RBA rate rises to variable rate borrowers, though the timing can vary. Fixed-rate borrowers are unaffected until their fixed term ends. If you're unsure how the latest rise affects your home loan, it's worth speaking to your finance broker.

Are further rate rises likely in 2026?

Possibly. Most economists expect the RBA to pause and assess the impact of three consecutive rises, though some forecasters have flagged the possibility of further increases later in the year if inflation remains sticky.

Should I consider fixing my loan given where rates are heading?

It depends on your circumstances. Fixing gives you certainty over repayments but means you won't benefit if rates fall, and you may lose access to features like offset accounts.

Can I refinance if my borrowing capacity has reduced?

Potentially, yes – though it depends on how much your capacity has changed and your current loan-to-value ratio. Some lenders have more flexible assessment criteria than others, and a finance broker can help identify options that may not be available through your existing lender directly.

Can I buy property with someone if we have different incomes?

Yes, lenders assess all applicants together, though differences in income may affect borrowing capacity and how ownership is structured. This is particularly worth discussing with a broker when purchasing property with family or friends.

What happens if my co-buyer can't meet their repayments?

On a joint loan, both parties are fully liable for the entire debt, regardless of their individual share.

What happens if I own property with someone, but they want to sell?

This depends on your ownership structure and any legal agreements in place. Planning an exit strategy early, ideally before settlement, is strongly recommended.