Bendigo Predicts Midyear Rate Hike as House Price Forecasts Are Cut — What Borrowers Need to Know

Bendigo and Adelaide Bank has broken from the consensus view of Australia's major lenders, predicting the Reserve Bank of Australia (RBA) will hike the cash rate at its midyear meeting rather than May 2026. The diverging forecast has arrived alongside revised downward house price predictions from major banks, underscoring the uncertainty now facing Australian borrowers.

Bendigo's Contrarian Rate Call

While the major four banks (ANZ, CBA, NAB, Westpac) have broadly aligned their rate forecasts around May or the second half of 2026, Bendigo and Adelaide Bank has publicly broken ranks. The bank cited "ongoing energy shocks" as the primary driver for pushing its rate hike prediction back to midyear — suggesting inflationary pressures from energy costs remain stickier than anticipated.

The RBA's cash rate currently sits at 4.10%, effective since 18 March 2026. Markets are watching the 5 May 2026 board meeting closely for any signal of further tightening.

House Price Forecasts Revised Downward

The rate uncertainty is feeding directly into property market sentiment. According to The Adviser (14 April 2026), a major Australian lender has revised its house price forecasts downward, citing a combination of:

• Higher interest rates: Ongoing rate pressure is reducing borrowing capacity across the board
• Weaker consumer confidence: Household sentiment has deteriorated amid global economic uncertainty and domestic inflation
• Affordability constraints: After years of price growth, many markets are bumping against hard affordability ceilings

The revision echoes concerns flagged earlier in 2026 by S&P, which warned that Australia's 5% deposit guarantee scheme could expose borrowers to negative equity risk if prices decline from elevated levels.

What This Means for Borrowers Right Now

For Australians considering a home loan in April–June 2026, the rate and price uncertainty has practical implications:

If you're buying: Factor in the possibility of a further rate rise when calculating your repayment buffer. A 25-basis-point increase on a $700,000 loan adds approximately $100 per month to principal-and-interest repayments.

If you're refinancing: The window for locking in competitive rates may be narrowing if Bendigo's midyear hike forecast proves correct. Getting your application in now — particularly for fixed-rate or alt-doc products — could be advantageous.

If you're self-employed: Rate hikes disproportionately affect borrowers already operating at the edge of serviceability. Alt doc and non-bank lenders often apply different serviceability calculations, which may offer more flexibility when bank stress tests tighten.

The Non-Bank Advantage in a High-Rate Environment

Non-bank lenders like MPFG Capital assess borrowers differently from major banks. Rather than relying solely on standard income documentation and APRA-mandated 3% serviceability buffers, specialist lenders can consider:

• BAS statements and accountant letters for self-employed income
• Business bank statements as alternative income evidence
• The overall credit profile and asset position of the borrower

This flexibility becomes especially valuable when rising rates cause banks to further tighten their assessment models.

Looking Ahead to May

All eyes are on the RBA's 5 May 2026 meeting. If the board holds rates, the debate will shift to whether cuts are coming in the second half of 2026 — a scenario some economists are pricing in. If the board raises rates, borrowing costs will increase and mortgage stress will intensify for variable-rate holders.

Either way, having a clear financing strategy — and potentially diversifying away from major bank products — is increasingly prudent.

MPFG Capital specialises in alt doc, residential, and commercial lending. To understand your options regardless of rate movements, contact us at finance@mpfg.com.au.

Sources: The Adviser, 14 April 2026; RBA rate data as of April 2026. This article is for informational purposes only and does not constitute financial advice.