Rate Hikes Return in 2026

After a year of easing in 2025, the Reserve Bank of Australia surprised markets by lifting the cash rate on 3 February 2026, marking its first hike in more than two years.

• Inflation Back in Focus: Early-year inflation proved more persistent than forecast, prompting the RBA to reverse course and reassert its inflation-fighting stance.

• What This Means for Brokers: All four major banks have already moved to lift fixed mortgage rates. This opens a short but critical window for brokers to proactively review client loan structures, challenge “lender loyalty,” and secure more resilient setups ahead of potential further hikes later in the year.

APRA’s New Lending Constraint Begins

From 1 February 2026, APRA has officially implemented Australia’s first quantitative cap on high debt-to-income lending.

• The Rule: Banks are now limited to issuing no more than 20% of new home loans to borrowers with total debt at six times income or higher.

• Who Feels It First: Highly leveraged investors and complex borrowers are likely to encounter restrictions as lenders approach their quarterly DTI quotas.

• Where Brokers Win: Non-bank lenders are currently exempt from this rule, creating valuable flexibility for self-employed clients, SMSF lending, and high-DTI scenarios that no longer fit neatly within the major banks.

First Home Buyers Drive Early-2026 Momentum

Policy Support Fuels Demand

First home buyers have emerged as a major force in mortgage activity at the start of the year.

• Government Tailwinds: The expanded federal 5% Deposit Scheme—now uncapped and without income limits—has unlocked a fresh wave of eligible buyers.

• Broker Insight: Pre-approval volumes are surging as first home buyers move quickly to secure finance ahead of potential tightening in bank credit policies under the new DTI framework.