A pre-Christmas gift to Sydney’s home loan mortgage borrowers was quashed today as the RBA held the official cash rate at 3.60%.
In the Central Bank’s final board meeting on monetary policy for 2025, it confirmed what experts forecasted and paused the rate for a third time in a row. Inflation worries are clearly driving this caution, as the RBA explained today. ‘While inflation has fallen substantially since its peak in 2022, it has picked up more recently,’ noted the board today.
Which is in contrast to the start of the year. Expectations for lower borrowing costs were bubbling up at the start of 2025 as inflation began a sustained period of easing. Analysts and banks tipped multiple RBA cuts – and by August, happily, they were proven correct. Three reductions from February pushed the cash rate down from 4.35% to 3.60%, lifting sentiment among households as lenders dropped rates. However, the fun ended rather abruptly just a few months ago.
The final quarter of the year has seen inflation jump back up, coming in higher than anticipated in the September quarter and above the RBA’s 2–3% preferred target range. October monthly inflation figures showed no signs of tempering, either – the headline rate jumped to 3.80% while the trimmed mean rose 3.30%. For borrowers, the message is clear. Any rate relief will depend on evidence that inflation is easing. And when that will happen is hard to say.
Investment bank Barrenjoey now expects two rate rises in 2026, reversing its earlier forecast of a cut next year. UBS is also predicting a rate increase late next year and another in early 2027, while JPMorgan has reiterated its view that rates will climb in 2027. However, Big Four bank Westpac still believes cuts are in the offing, tipping two in mid-late 2026.
Attention now turns to 3 February, when the RBA board delivers its first update of 2026. The RBA added today that the data do suggest ‘some signs of a more broadly based pick-up in inflation, part of which may be persistent and will bear close monitoring.’
It’s worth also noting that 18 home-loan lenders have increased at least one of their fixed loan rates since 1 November. If you are considering reviewing your current arrangements, reach out to Mortgage Broker Sydney.
Our friendly brokers can meet you wherever is most convenient: your home, office, a local cafe or arrange a digital interview.
In addition, we are here to guide you on various strategies such as uncovering lower rates, enhancing savings, consolidating debts, and alleviating the impact of rising household prices.
And finally, thank you for your continued confidence in Mortgage Broker Sydney. We hope this festive season brings a chance to slow down and enjoy time with your loved ones.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!