RBA Holds Rates Steady in February 2026: What It Means for Borrowers

The Reserve Bank of Australia (RBA) has announced its decision to hold the official cash rate steady at its February 2026 board meeting, keeping rates unchanged for the second consecutive month. The decision was widely anticipated by economists and financial markets, but it still carries significant implications for millions of Australian borrowers. In this article, we break down exactly what the RBA's decision means for different types of borrowers, why the board chose to hold, and what the outlook looks like for the rest of 2026.

The February 2026 Decision Explained

The RBA board met on 18 February 2026 and voted unanimously to keep the cash rate at its current level. In its post-meeting statement, the board noted that inflation is continuing to moderate broadly in line with forecasts, but that underlying price pressures remain above the midpoint of the 2-3 per cent target band. The board reiterated that it needs to see sustained progress on inflation before considering further adjustments to monetary policy. Governor Michele Bullock emphasised during her press conference that the board is monitoring several key indicators including trimmed mean inflation, wages growth, and the labour market. She noted that the economy is evolving largely as expected, and that the current policy setting is considered appropriate to bring inflation sustainably within the target range over a reasonable timeframe.

What This Means for Home Loan Borrowers

For the roughly one-third of Australian households with a mortgage, the hold decision provides continued stability. Variable rate borrowers will see no change to their monthly repayments, which offers welcome predictability for household budgets. However, it is important to remember that rates remain significantly higher than the record lows seen during 2020-2021. A borrower with a $600,000 variable rate home loan at 6.10 per cent is paying approximately $3,640 per month in principal and interest repayments. That is roughly $1,100 more per month than the same borrower would have been paying at the trough of the rate cycle. For those on fixed rates that are due to expire in the coming months, the hold decision does not change the fundamental reality that you will likely be rolling onto a higher variable rate. If your fixed rate is expiring soon, now is the time to shop around. Lenders are competing aggressively for refinance business, and you may be able to secure a rate well below the standard variable rate by negotiating or switching lenders.

Impact on Car Loan and Personal Loan Rates

Car loan and personal loan rates are not directly tied to the cash rate in the same way that variable home loans are. These products are priced based on a combination of wholesale funding costs, competitive dynamics, and risk assessment. That said, the stable cash rate environment does contribute to stability in car loan pricing. Currently, competitive secured car loan rates start from around 5.99 per cent for borrowers with strong credit profiles and newer vehicles. The hold decision suggests these rates are unlikely to move significantly in either direction in the near term. If you are considering purchasing a vehicle, the current rate environment is relatively favourable compared to the peaks seen in late 2024. For those looking at unsecured personal loans, rates typically range from 7 per cent to 15 per cent depending on credit profile and loan amount. The RBA hold does not directly influence these products, but the broader economic stability it signals is positive for lending conditions generally.

Business Lending Implications

Small business owners should note that the hold decision keeps business lending costs stable. Variable rate business loans, overdraft facilities, and lines of credit will remain at their current levels. For businesses that have been managing higher borrowing costs over the past two years, this provides continued certainty for cash flow planning. The RBA's commentary on the economy being "resilient" is a double-edged sword for businesses. On one hand, it suggests consumer spending and economic activity remain supportive. On the other hand, it means the RBA sees no urgency to cut rates to stimulate the economy, so borrowing costs will remain elevated for longer. Business owners considering equipment purchases or expansion should factor in the likelihood that rates will remain at current levels for at least the next few months. The instant asset write-off provisions remain in place, so there may be tax advantages to proceeding with planned capital expenditure rather than waiting for rate relief that may not materialise soon.

What Is the Outlook for 2026?

Financial markets are currently pricing in one to two rate cuts during 2026, with the first cut most likely in the second half of the year. However, this is contingent on inflation continuing to moderate and the labour market softening slightly from its current relatively tight conditions. The key data points to watch in the coming months include the quarterly Consumer Price Index (CPI) releases, monthly employment figures, and retail sales data. If inflation falls faster than expected, the case for earlier rate cuts strengthens. Conversely, if inflation proves sticky or if global factors (such as energy prices or geopolitical disruptions) push prices higher, the RBA may need to hold rates for longer. Most major bank economists are forecasting the cash rate to be 25 to 50 basis points lower by the end of 2026, which would translate to modest savings for variable rate borrowers. On a $500,000 home loan, a 25 basis point cut would reduce monthly repayments by approximately $80.

What Should Borrowers Do Now?

Regardless of the RBA's decision, there are practical steps every borrower should consider. First, review your current loan arrangements. If you have not compared your rate against market offerings in the past 12 months, you may be paying more than necessary. Many lenders reserve their best rates for new customers, so existing borrowers often end up on higher rates through inertia. Second, if you are on a variable rate, consider whether making extra repayments while rates are stable is possible. Extra repayments made now will reduce the principal faster and compound the benefit when rates eventually come down. Third, if you are considering a major purchase such as a home, car, or business asset, the current stability in rates provides a reasonable environment to make informed decisions. Waiting for rate cuts is a strategy, but it comes with the risk of missing opportunities in the meantime, particularly in the property market where prices may rise in anticipation of lower rates. Finally, speak to a finance broker who can assess your individual situation and compare options across multiple lenders. The difference between the best and worst rates on the market can be substantial, and professional guidance can save you thousands over the life of a loan.