16/06/2026
🏡 What future rate hikes could mean for your mortgage strategy
There’s growing discussion that we may not be done with interest rate rises yet. Westpac’s chief economist Luci Ellis has suggested the RBA could hold rates in the short term but still deliver further increases later this year, potentially pushing the cash rate toward 4.85% if inflation proves “stickier” than expected.
For borrowers, this matters because the cost of borrowing is directly tied to inflation and RBA decisions. If inflation remains elevated—driven by wages growth, fuel price volatility, and ongoing services inflation—banks may price in higher repayment buffers, reducing borrowing capacity even before any official hike lands.
From a mortgage perspective, this can mean:
• Lower maximum loan approvals
• Higher monthly repayments on variable loans
• Tighter refinancing conditions
• Increased pressure on household cash flow
We’ve already seen inflation remain above target, meaning the RBA still has room—and intent—to act if needed. On the flip side, softer spending and slowing economic momentum could eventually stabilise rates, but timing remains uncertain.
The key takeaway: waiting for certainty can cost borrowing power. Structuring your loan correctly now—fixed vs variable mix, offset strategy, and stress-testing repayments—matters more than ever in this cycle.
If you’re unsure how future rate movements could affect your borrowing position, it’s worth reviewing your scenario early.
