Have rates peaked? Brokers and economists weigh in

Mortgage brokers say the Reserve Bank of Australia's (RBA) fourth rate rise of 2026 is already reshaping client conversations and cutting into borrowing capacity, with some not ruling out another increase before the cycle peaks.

Tuesday's 25 basis point increase takes the cash rate to 4.6%, its highest level since November 2011 and 100 basis points higher than in February.

For a borrower with a $600,000 mortgage and 25 years remaining, the latest rise adds approximately $91 a month to minimum repayments if lenders pass it on in full.

Macquarie Bank has already confirmed it will pass the hike on to borrowers on 15 October, with more lenders expected to follow.

Anthony Waldron (pictured, left), chief executive of Mortgage Choice, said today’s decision was expected given recent inflation data.

"The Reserve Bank's decision to raise the cash rate is unsurprising. It comes off the back of the latest CPI data, which shows inflation has remained stubbornly high,” said Waldron.

"RBA officials have made it clear that the Board is determined to bring inflation down. Until the RBA is satisfied that inflation is trending in the right direction, there is a risk that rates could rise further."

How close is the rate peak?

Joseph Daoud (pictured, centre), founder of mortgage brokerage It's Simple Finance, reckons the cycle is close to its top.

"My view is we're near the peak right now, though I wouldn't rule out one more rise before we get there,” he told MPA. “I'd say we won't see a cut until mid-2027. Anything can happen between now and then, but if things keep going as they are, I wouldn't start budgeting for a near-future rate cut."

Daoud's timeline lines up with the view from AMP chief economist Shane Oliver, who believes the RBA has most likely reached the top of the cycle. He cautions, however, that the risk of a further hike remains "very high".

"Our base case is that rates have probably peaked as the RBA has likely now done enough to weaken demand sufficiently to push inflation back to target by the end of next year," Oliver said.

Oliver expects evidence of a slowing economy to build before the RBA's next meeting in November. He pointed to falling home prices, a softening jobs market and rising recession risks. The share of household income going to mortgage interest payments is already approaching its 2024 highs, he noted, while household spending was flat in August.

"The latest rate hike runs the risk that we may be close to a tipping point for some mortgage holders, resulting in increased distressed selling of homes,” said Oliver. Even so, that doesn’t mean relief is close. Oliver gave several reasons for the RBA to stay hawkish:

• Trimmed mean inflation is 3.6%, well above the 2–3% target band.

• Wage costs are rising.

• Oil prices are higher.

• Inflation has been above target in five of the past six years.

Money markets are signalling another hike by February 2027, with a 70% probability of a further increase by June.

As for Oliver, he does not expect the RBA to start cutting until around August 2027. He also warned against swinging too far the other way. "Just as many (including me) got too optimistic on rates last year, many may now be getting too pessimistic."

Borrowing capacity squeeze reshapes buyer behaviour

Brokers are also reporting that buyers are becoming more cautious about how much they borrow, rather than leaving the market altogether.

That shift is showing up most clearly among first home buyers, according to Maddie Walton (pictured, right), mortgage broker at Money Lounge.

“For first home buyers in particular, the conversation has shifted from ‘where are rates heading?’ to ‘what can I comfortably afford today?’” she said. “Even a small increase can affect borrowing capacity and triggers buyers to reassess their price range, or take a little longer to build their buffer.”

Amid a mounting buyer’s market as swathes of investors flee the property market, worsening borrowing power is expected to cause borrowers to offer even less for available properties in order to keep their costs as low as possible.

“We’re also seeing borrowers becoming much more conscious of repayments and choosing to buy within a comfortable budget rather than simply borrowing their maximum,” she said.

“That said, demand hasn’t disappeared. The buyers who are moving forward are generally the ones who understand their numbers, have a clear budget and are making decisions based on what’s sustainable for them, rather than trying to time the next rate move.”

Official lending data points the same way. According to the Australian Bureau of Statistics (ABS), the number of investor loans fell 8.6% in the June quarter of 2026, the largest fall since the September quarter of 2022. The number of new first home buyer loans was unchanged from a year earlier.

"So not everyone has stopped. It's mostly investors who've stepped back, and they tend to come back the moment rates turn," Daoud said.

Brokers urge borrowers to act early

Mark Haron, executive director of aggregator Connective, said the focus should be on practical options.

He told MPA: "Another rate rise will be difficult news for borrowers already managing higher living costs and mortgage repayments. For those households, the focus needs to be on understanding the impact rather than panicking about it.

"Brokers have an important role to play here. They can review a client's loan, compare alternatives, and help borrowers work out what practical options are available before financial pressure becomes more difficult to manage.

"For buyers, another increase will also affect borrowing capacity and repayments, so getting clear advice early matters. This is a time when borrowers need facts, options and a plan and that's exactly where a good broker can help."

Waldron urged borrowers to check whether their loan is still competitive. "If it's been over a year since you reviewed your home loan, speak to your mortgage broker to understand whether it's still the right one for you.”

What borrowers in mortgage stress can do

For borrowers who are struggling, Daoud’s message is to pick up the phone early. If a lender won’t help, the next step is the Australian Financial Complaints Authority (AFCA).

“If you’re struggling, call your lender before you miss a repayment, not after,” he said. “Every lender is legally required to consider a hardship application, and they all have hardship teams.

“Options include things like pausing repayments, extending your term, switching to interest only repayments, and so on. People don’t like making that call, but it won’t trigger something terrible.

“It puts you in a far stronger position than going quiet for three months and ringing once you’re behind. If your lender won’t help, AFCA will look at it and it costs you nothing.”

The National Debt Helpline on 1800 007 007 offers a free financial counsellor who can negotiate with a lender on a borrower’s behalf.