RBA Holds Cash Rate at 3.85% — What Non-Bank Borrowers Need to Know

RBA Cash Rate at 3.85% — Implications for Self-Employed and Non-Bank Borrowers

The Reserve Bank of Australia (RBA) raised its cash rate target by 25 basis points to 3.85% on 3 February 2026, with the decision effective from 4 February. The next monetary policy announcement is scheduled for 17 March 2026 at 2:30 pm AEDT.

This rate increase reflects the RBA's ongoing effort to return inflation to its 2–3% target band. Australia's Consumer Price Index (CPI) rose 3.8% annually in January 2026 — still above target — signalling that rate relief is not imminent.

Why This Rate Environment Matters More for Self-Employed Borrowers

For standard PAYG employees, a rate rise simply means higher variable mortgage repayments. For self-employed Australians, the implications run deeper.

Major banks routinely tighten lending criteria in rising rate environments, increasing serviceability buffers and requiring more documentation. This makes it harder — not just more expensive — to get approved. Non-bank lenders like MPFG Capital operate outside APRA's direct ADI lending rules, enabling a more pragmatic approach to income assessment.

Key differences for Alt Doc borrowers in the current rate environment:

The Broader Economic Picture (March 2026)

According to ABS and RBA data current as of 10 March 2026:

• Cash rate: 3.85% (effective 4 Feb 2026)
• CPI inflation: 3.8% annually (January 2026)
• GDP growth: 0.8% quarterly (December 2025)
• Unemployment: 4.1% (January 2026, seasonally adjusted)
• AUD/USD: 0.7063

RBA Governor Michele Bullock, speaking at the Australian Financial Review Business Summit on 3 March 2026, acknowledged elevated economic uncertainty but reaffirmed the Board's commitment to price stability.

What Self-Employed Borrowers Should Do Now

1. Don't wait for rate cuts — no one knows when rates will fall; borrowing capacity today may be similar to or better than in 12 months
2. Explore Alt Doc loan options — MPFG's Alt Doc products assess income using BAS, accountant letters, or bank statement income
3. Review your debt structure — a higher rate environment is the right time to consolidate and simplify
4. Speak to a specialist broker — non-bank lending is a niche; work with professionals who know the market

*This article provides general information only and does not constitute financial advice. Please consult a qualified finance professional before making lending decisions. MPFG Capital holds ACL 553698.*

MPFG Capital's Position

At MPFG Capital, we specialise in lending to the borrowers the major banks overlook — self-employed Australians, new migrants, and small business owners. Rising rates do not diminish the availability of non-bank finance; they often make the case for exploring alternatives even stronger.

Watch for the RBA's next decision on 17 March 2026. We will provide an update immediately after the announcement.