Feeling the pinch from the RBA rate rise? You don’t have to settle for a higher rate

If the latest RBA rate rise has you sweating harder than daycare drop-off, you’re not alone. After three cash rate cuts in 2025, the Reserve Bank of Australia has officially lifted the cash rate again in a move that’s hitting young families right where it hurts: the weekly budget.

The RBA increased the cash rate by 0.25% to 3.85%, marking the first upward move since late 2023.

For parents already juggling childcare fees, groceries, activities, and the general chaos of raising small humans, this rate rise feels like one more thing stacked on an already-full plate.

But before the panic spirals, let’s break down what this actually means and what you can do to soften the blow.

What the rate rise could mean for your mortgage

If you’re on a variable home loan, lenders are likely to pass on the full increase. Mortgage Choice crunched the numbers, and the extra monthly repayments* could look like this:

These figures assume a starting rate of 5.76% and are rounded to the nearest $10.

For many families, even an extra $80–$160 a month is enough to tip the budget from “tight” to “tense.” And with cost-of-living pressures still biting, it’s no wonder parents are feeling the pinch.

*Source: RBA hikes rates for first time in two years: How much will your mortgage cost? – Mortgage Choice

Could refinancing save you money?

When you swap your current home loan for a new one, whether with your existing lender or a different lender altogether, that’s refinancing. And right now, with your rate having just gone up, it’s one of the most worthwhile conversations you can have.

Even small changes to your loan, such as securing a lower rate or finding a more efficient structure, can make a huge difference to the amount you pay over the long term. There are thousands of home loan options available, and it’s never been easier to switch, particularly when you use a mortgage broker who can compare hundreds of products on your behalf.

Here are five reasons families choose to refinance:

• Secure a better interest rate: Your rate may have been competitive when you first took out your loan, but that changes over time. Lenders actively compete for new customers and often offer better deals than they give their existing ones. A lower rate means lower repayments and potentially thousands of dollars cut from the overall cost of your loan.
• Switch to a fixed rate: If you’d prefer certainty that your repayments won’t keep climbing, refinancing lets you lock in a fixed rate so you know exactly what you’re paying each month.
• Access useful loan features: Your current loan may not offer features that could genuinely help your household budget, such as an offset account (which reduces the interest you’re charged), a redraw facility, or flexible repayment options. If you’re not using the features on your current loan, you might also be paying for them unnecessarily and a more basic loan could actually cost you less.
• Consolidate other debts: Mortgage rates are generally much lower than credit cards or personal loans. Refinancing gives you the opportunity to roll higher-interest debts into your home loan, reducing total repayments and simplifying your finances into one monthly payment.
• Unlock your home equity: If you’ve been in your home for a few years, its value has likely grown. Refinancing can help you access that equity for a renovation, an investment, or other goals.

It’s worth knowing there can be costs involved in refinancing, including lender fees and potential break costs if you’re leaving a fixed-rate loan early. A good broker will calculate your break-even point upfront so you know exactly whether switching makes financial sense for your situation, and how quickly you’d start benefiting.

How to combat a rate rise

Mortgage Choice CEO Anthony Waldron said: “My advice to anyone feeling uncertain is simple: don’t leave things up to chance. Let a broker do the legwork to find the lender that fits your unique needs.”

That’s why we’ve partnered with Mortgage Choice, to give Care for Kids families direct access to experienced brokers who understand the pressure that young families are under. A 15-minute conversation could potentially save you thousands over the life of your loan, as well as day-to-day budget relief.

Book a free 15-minute broker chat today, completely obligation-free.

Small ways families can save

While reviewing your mortgage is essential, it’s not the only lever you can pull. Here are four places where families often overspend without realising it, and where you can claw back cash fast.

1. Ghost subscriptions

• Open your phone settings and go to Subscriptions (iPhone) or Google Play subscriptions (Android)
• Cancel anything you haven’t actively used in the last 30 days
• Check your bank and credit card statements for subscriptions billing directly outside the app store
• Review kids’ app renewals and cancel anything they’ve outgrown
• Consider downgrading family streaming plans if half the household isn’t watching

Potential savings: $20–$60 per month

2. Phone plans

• Check your last 3 months of data usage in your provider’s app
• If you’re using less than half your allowance, drop down a tier
• Compare what budget providers like Boost, Belong, Aldi Mobile, and Kogan are offering
• Don’t be swayed by “entertainment extras” you never actually use

Potential savings: $10–$30 per month per adult

3. Energy bills

• Use the government comparison site Energy Made Easy (it’s free and unbiased)
• Look for plans with sign-up credits, lower usage rates, or better solar feed-in tariffs
• Call your current provider first and tell them you’ve found a better deal. They’ll often match it to keep you
• Check if you’re eligible for any concessions or rebates

Potential savings: $200–$400 per year

4. Takeaway meals

• Swap one takeaway night for a lazy dinner: toasties, pasta with jar sauce, frozen dumplings, scrambled eggs on toast
• Keep emergency freezer meals on hand for nights when cooking feels impossible
• Set a realistic monthly takeaway budget and stick to it
• If you’re ordering out of convenience rather than exhaustion, batch cook on Sunday and reheat through the week

Potential savings: $40–$80 per week

Between cancelled subscriptions, cheaper phone plans, energy switching, and cutting back takeaway, you could offset most of that mortgage increase without much pain. But if you’re still feeling stretched, it’s worth looking at your biggest weekly expense: childcare.

What about childcare costs?

The good news is, unlike your interest rate, you do have control over what you pay for care.

Care for Kids lets you compare childcare fees, availability, and services across your area in one place. Whether you’re looking to switch to a more affordable centre, reduce days, or find care closer to home to save on petrol, it pays to know your options.

Compare childcare near you.

FAQs about the RBA rate rise

1. How much could the RBA rate rise increase mortgage repayments?

The RBA increased the cash rate by 25 basis points to 3.85% in February 2026. For a $1 million mortgage, monthly repayments could increase by approximately $160. Smaller mortgages could see proportional increases: $120 extra per month for a $750,000 loan, $80 for a $500,000 loan, and $40 for a $250,000 loan. Keep in mind that every customer’s individual situation is different and loan repayments and interest rates will vary.

2. What are the smart strategies to manage finances in an increasing rate environment?

Start by speaking to a Mortgage Choice broker to review your current rate and explore whether refinancing could reduce your repayments. Even a small rate reduction can give your budget meaningful relief. For immediate savings, cancel unused subscriptions ($20–60/month), review phone plans ($10–30/month per adult), switch energy providers ($200–400/year), and reduce takeaway by one night per week ($40–80/week).

3. How do I find subscriptions I’ve forgotten about?

Open your phone settings and navigate to Subscriptions (iPhone) or Google Play subscriptions (Android). Check your bank and credit card statements for direct billing subscriptions not listed in app stores. Cancel anything you haven’t actively used in the last 30 days, and review kids’ app renewals that may have auto-renewed.

4. Can switching energy providers really save hundreds of dollars?

Yes. Energy companies often don’t reward loyalty and quietly roll long-term customers onto more expensive plans. A 10-minute comparison using sites like Energy Made Easy can save families $200–400 per year. Many providers also offer sign-up credits and will match competitors’ rates if you call and negotiate.