Home topics news Source: Spelio on Flickr News News RBA’s first rate rise in two years puts squeeze on struggling businesses Yajush Gupta February 4, 2026 The RBA has hiked rates to 3.85%, adding $115 monthly to average mortgages. Industry experts reveal how SMEs are responding to the squeeze What’s happening: The Reserve Bank of Australia has lifted the cash rate by 25 basis points to 3.85 per cent, marking the first increase in over two years. Why this matters : For SMEs, the decision arrives as working capital enquiries decline and consumer sentiment weakens, creating a challenging environment for growth and investment decisions. The decision to raise rates reflects mounting concerns about inflation, which picked up materially in the second half of 2025. The central bank attributes this to greater capacity pressures and stronger-than-expected private demand growth. For mortgage holders, the impact is immediate and measurable. Joel Gibson, Consumer Finance Expert at Zyft, warns the increase will hurt households already under strain. “Today’s rate hike is going to hurt, and there’s no way around that. For the 35 to 40 per cent of Australians with a mortgage, we’re talking an extra $115 a month on the average $694,000 loan. According to Finder, over half of mortgage holders were experiencing mortgage stress even before this decision, and today has just made an already‑fragile situation worse.” Gibson emphasises that renters won’t escape the pressure either. “Renters won’t escape either. Landlords will pass on what they can. Rents are still rising, with