Is Another Rate Rise Coming? What Tuesday's RBA Decision Means For Your Mortgage | OD #31
The cash rate is sitting at 4.6%, the highest since 2011, and the RBA has already delivered four rate hikes this year. Now, with another decision landing on Melbourne Cup Day, the question everyone's asking is: are we about to get hit with a fifth? This episode cuts through the noise and breaks down what the data is actually saying, what the banks are predicting, and what it all means if you're holding or buying property right now. We start with where we stand. The RBA lifted rates last month in September, pushing the cash rate to 4.6%, the highest level in 15 years. Then this morning, the ABS dropped the September inflation numbers. Headline inflation came in at 4.3% for the year, up from 4% the month before. A fair chunk of that jump was fuel, but the number the RBA really cares about is the trimmed mean, which strips out the wild swings and shows the underlying trend. That rose 1% for the quarter, where the forecast was 0.8%. It's running hotter than the RBA expected, and we're nowhere near their 2 to 3% target band. So what are the banks predicting? Before today's number dropped, it was split down the middle. ANZ and Westpac were both tipping a hike, while CBA and NAB were calling a hold. Westpac said if underlying inflation came in around 0.9%, they'd expect a rise, and it came in at 1%. On top of that, the RBA has flagged concern that businesses are starting to treat 3% to 3.5% inflation as the new normal, and that's what keeps central banks awake at night. Once people expect higher prices, they build them in. Our read is simple: nobody knows for sure, but a hike to 4.85% on Tuesday is a real chance, probably around 80%. So plan for it, and if it's a hold, treat it as a bonus. What does one more hike actually cost you? On a $700,000 loan, a 25 basis point rise adds roughly $107 a month to your repayments. That doesn't sound like much on its own, but this would be the fifth hike this year. Stack them up and the same borrower is now paying hundreds more per month than they were in January. That's a car payment, that's a holiday, that's real money leaving your budget. And it's not just repayments. Every hike also shrinks how much the bank will lend you down the track. If you're planning to buy or refinance, your budget is quietly getting smaller unless your income is growing at the same pace, which in this economy is rare. So what can you do about it? Three things. First, stress test yourself. Take your current repayments, add another one or two rate rises, and see if your budget still works. If it doesn't, you want to know now, not in January. Second, call your broker or your lender. Banks often give new customers sharper rates than loyal ones. It's called the loyalty tax, and a ten minute phone call can claw back more than one hike will cost you. Third, if you're an investor, remember that rate rises scare buyers off. That means less competition, more negotiating power, and developers who are more willing to do a deal. We've seen this firsthand lately with clients purchasing in growth corridors. Rentals are still tight in a lot of markets, so rents keep doing the heavy lifting on holding costs. But run your numbers at a higher rate, not today's rate. If the deal only works when rates fall, it's not really a deal. The short version is this: inflation came in hot this morning, a rate rise on Tuesday is a high and real chance, so plan for it. And if it does come through, don't panic. The media will spin it harder than it needs to be. Rates go up and rates come down. You're not going to have these rates forever. People who build wealth through property don't try to time every RBA meeting. They buy well, they hold well, and they make sure they can sleep at night while they do it. If you're serious about buying or holding through this cycle, follow the show, share it with someone navigating rates right now, and leave a review with your biggest question about what comes next. Thinking about buying property? Book a free strategy call with Asset Road: https://www.assetroad.com.au Follow us on Instagram @oscardonproperty and @assetroad for daily property insights. General information only. Nothing in this episode is personal financial advice. Consider your own circumstances and get professional advice before acting.
