Melbourne home loan mortgage holders didn’t see an early Christmas gift from the RBA today, as it held the official cash rate at 3.60%.
As expected, the latest inflation numbers were enough of a worry for the RBA to play it safe today and pause its cash rate.
‘The recent data suggest the risks to inflation have tilted to the upside, but it will take a little longer to assess the persistence of inflationary pressures,’ said the RBA today.
The Central Bank added 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.’
So, the year ends on a frustrating note for borrowers who started 2025 with high expectations.
Analysts had forecast rate cuts – and up until August, that was on track. Three rate cuts from February onwards dragged the official cash rate down from 4.35% to 3.60% – slashing hundreds of dollars off average monthly mortgage repayments.
Finally, as inflation dropped into the RBA’s preferred 2–3% range, borrowers saw some relief after a tough few years of rising repayments and a cost-of-living squeeze. All looked rosy with some even tipping an official cash rate around 3.10% by the time we pulled our Christmas crackers.
That’s stalled completely, now, as inflation proved hotter than anticipated, prompting the RBA to take a cautious approach to the official rate.
October figures confirmed that inflation had jumped to 3.80% in the 12 months to the end of October, up from 3.60%.
Even the trimmed mean figure for inflation – which strips out volatile items – was up, this time to 3.30% in October.
For now, inflation is trending in the wrong direction for borrowers. However, Westpac is forecasting a couple of rate cuts in Q2–3 next year. The remaining Big Four banks are all tipping an extended pause in 2026.
That said, RBA Governor Michele Bullock did flag at last week’s Senate Economics Legislation Committee that higher interest rates could be on the cards next year.
‘The Board … will pay close attention to developments in the global economy and financial markets, trends in domestic demand,’ concluded the RBA, ‘and the outlook for inflation and the labour market.’
Should we see another drop from the RBA, you can find out more in our recently published article on preparing for a rate cut.
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne. We are one of the most positively reviewed mortgage brokers in Melbourne.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household costs.
As another year winds down, all here at Mortgage Broker Melbourne hope you enjoy a well-earned break with family and friends, and we look forward to supporting your mortgage plans in the new year.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!