Pendium Finance
Consumer Edition · Monthly Brief
May 2026
May 2026 · RBA Decision
The RBA just reversed every rate cut from 2025. The cash rate is back at its previous peak — but costs have kept climbing since then, which means this one hits harder than last time.
Eight of nine board members voted to hike. The one who wanted to hold was outvoted decisively — this wasn't a close call.
The cash rate is now 4.35 per cent — up 75 basis points since February and back where it peaked in 2023. The driver is fuel prices, which surged 32.8 per cent in a single month following the Iran conflict, pushing annual CPI to 4.6 per cent — the highest since September 2023. The RBA's preferred underlying measure, trimmed mean, is running at 3.3 per cent annually — and the RBA has now revised its own trimmed mean forecast up to 3.5 per cent for the year to Q4 2026, well above the 2–3 per cent target. The board isn't satisfied, and it said so (RBA, 5 May 2026; ABS, 29 April 2026).
Term explained · this month
Trimmed Mean
Regular inflation figures — what the ABS calls "headline CPI" — include everything: fuel, lettuce, school fees, the lot. The problem is that some prices spike dramatically in a single month for one-off reasons, like a cyclone wiping out a crop or, as happened here, a conflict sending petrol prices surging 32.8 per cent. Those spikes make the overall number jump in a way that doesn't reflect the underlying pressure in the economy.
Trimmed mean removes the most extreme price movements in both directions — the biggest rises and the biggest falls — and looks at what's happening in the middle. Think of it as the inflation reading with the noise cut out. It moves more slowly and more steadily, and the RBA treats it as the more honest signal of where prices are actually trending.
Why it matters right now: Even with fuel's dramatic surge stripped out, trimmed mean is still running at 3.3 per cent — above the RBA's 2–3 per cent target. That's the number that tells the RBA the rate hikes need to keep working, and it's the main reason the board didn't pause yesterday.
In dollar terms: yesterday's hike adds around $91 a month on a $600,000 loan and $151 on a million dollars.* Since February, the cumulative hit is $453 a month on a million-dollar mortgage.
All five major lenders have confirmed they will pass on the full 0.25% to variable rate borrowers. ANZ, NAB, CommBank, and Westpac are effective 15 May 2026. Macquarie follows on 22 May 2026 — one week later than the Big 4.
On where rates go from here, the banks aren't aligned. ANZ, CBA, and NAB see the cycle as done at 4.35%. Westpac is at the other end — forecasting two more hikes to a peak of 4.85%. Macquarie sits between them: a pause is likely until at least August while the RBA assesses conditions, but risks remain skewed toward one further move. Market pricing, per Bloomberg, leans closer to Macquarie's view — implying another 25bp by September.
RBA cash rate — the 2025 cuts and the full reversal
Source: RBA cash rate target history
The next decision is July. Whatever happens between now and then — the CPI print, fuel price movements, how consumer spending holds up — will determine whether the banks who think we're done are right, or whether Macquarie and the market are closer to the mark.
Perth is up 2.1% this month. Sydney is down 0.6%. One country, one month, 2.7 percentage points apart.
National dwelling values rose just 0.3 per cent in April — the weakest reading in nearly a year — but that single number disguises two completely different markets (Cotality, 30 April 2026). Sydney and Melbourne are both down 0.6 per cent. Perth, Adelaide, and Brisbane are still growing, each supported by supply constraints and affordability relative to the eastern capitals.
The auction market is telling you something the monthly number doesn't. Sydney's average clearance rate in April was approximately 50 per cent — the weakest since April 2020. Melbourne averaged around 54 per cent. Those are buyer's market numbers in cities that have spent most of the last decade in seller's territory. The national median dwelling value sits at $940,048. If you're buying in Sydney or Melbourne, you have more room to negotiate than you've had in four years. The challenge is that borrowing capacity has also compressed with every rate hike — so you need your finance sorted before you take advantage of it.
Rental market. Vacancy remains stubbornly tight at 1.6 per cent nationally. Demand continues to outstrip supply in most capital cities, keeping upward pressure on rents and supporting gross yields for investors. For anyone holding investment property right now, the rental income story is providing a meaningful offset to the rising rate environment — even as capital growth in Sydney and Melbourne moderates (Cotality, 1 May 2026).
Before asking whether to fix, ask whether you know what rate you're currently on. Most people don't — and the gap between lenders is real.
With all five major lenders confirmed to pass on the full increase, the average owner-occupier variable rate will land around ~6.21 per cent p.a.* once changes clear from 15 May. That's the rate environment your next decision — fix, variable, or refinance — needs to be made against.
On fixing: the decision depends entirely on whether you believe Westpac (two more hikes, cash rate peaks at 4.85%) or ANZ, CBA, and NAB (done here at 4.35%). If you believe Westpac, locking in a 2–3 year fixed rate right now looks sensible. If you believe the other three, variable is likely cheaper over the period. There is genuinely no correct answer for everyone — it depends on your income security, your buffer, and your risk appetite. If you're unsure, that's exactly the conversation a broker should be helping you work through.
On refinancing: cashbacks are largely gone, but the rate gap between lenders hasn't disappeared. Across 45 lenders on the same scenario — $600,000, owner-occupied, 70% LVR — post-hike variable rates run from 5.89 per cent to 6.54 per cent among mainstream lenders. That's a 65 basis point spread on identical borrowing. The borrowers paying the most right now are those who set their loan and haven't revisited it. A single conversation costs nothing. Finding out you're at the top of that range — that's thousands of dollars a year.
Look at your actual rate this week. Not an estimate — the number on your statement. Then compare it. That one step is worth more than any decision about fixing.
The jobs market is holding. Confidence has cratered. Both are true at the same time — and that tension is the whole story.
Unemployment held at 4.3 per cent in March with 18,000 jobs added, mostly full-time (ABS, 16 April 2026). The labour market hasn't broken. But consumer confidence crashed 12.5 per cent in April to 80.1 on the Westpac-Melbourne Institute index — the biggest monthly fall since COVID, driven by fuel prices and the third rate hike hitting at the same time (Melbourne Institute, April 2026).
The wage price index grew 3.4 per cent annually to December 2025. With CPI at 4.6 per cent, real wages are still going backwards. People feel squeezed because they are — and that feeling is now showing up in the data.
The next sentiment reading drops 12 May. It will be the first post-hike read and worth watching.
Three quarters of buyers expect AI somewhere in their property transaction. But trust in AI for home buying just fell to its lowest point on record.
Cotality's AI in Housing 2026 Report — released in April — found that 75 per cent of homebuyers now expect AI to be embedded in their transaction, assuming it's already at work in property websites (86%), lenders (80%), and brokers (79%). At the same time, trust in AI to help find a home dropped 14 points in a single year to just 16 per cent (Cotality, April 2026). People expect it, but they don't trust it. That gap is significant.
The practical read: tools like ANZ's new AI-powered pre-approval estimator are useful for a directional number before an auction. They're not useful for making a purchasing decision. What AI consistently gets wrong is the same thing it's always gotten wrong in lending — your rental income, your trust structure, your complex income mix, the off-market deal with unusual conditions. The data it can't see is exactly what changes the outcome. Use it to benchmark. Don't use it to decide.
From James Alexander · Director, Pendium Finance
Three hikes in three months is the RBA telling the market it moved too early in 2025. I don't think that's unfair — inflation picked back up faster than most expected and the Iran conflict made things significantly worse. The hard part is that some of the inflation driving these hikes is energy-based, and rate hikes don't reduce petrol prices. The RBA is doing what it can with the tools it has.
The group I think about most right now are borrowers who fixed at sub-2% in 2021 or 2022 and are rolling off into this environment. They were largely shielded from the 2022-23 tightening cycle — when the cash rate went from 0.10% to 4.35% — and are now coming off their fixed terms directly into current market rates. If that's you, the time to have a conversation about your options is before the fixed term expires — not when the new statement arrives.
For everyone else: the core question is whether you're paying a competitive rate. Not an estimate of your rate — the actual figure. I'd encourage anyone who hasn't checked in the last six months to do it this week. The market has changed significantly and so has the gap between the best and worst rates available.
What I'm watching this month:
If you're mid-application, reviewing your rate, or working through a fixed vs variable decision — reach out directly. These are exactly the conversations I do every day.
— James Alexander, Director, Pendium Finance · 1300 876 410
* Post-hike average rate of ~6.21% p.a. is calculated from Quickli serviceability data across 30 mainstream lenders for a $600,000 owner-occupied principal and interest loan at 70% LVR, as at 6 May 2026, with 0.25% added to reflect confirmed lender rate increases. Full 45-lender panel (including specialist and non-bank lenders) averages 6.41% post-hike. Rate range of 5.89%–6.54% reflects post-hike mainstream panel. Results are a guide only. No loan approval can be assumed. All applications subject to individual lender credit criteria.