All Four Big Banks Now Expect Another Rate Rise. Here's What That Means for Your Mortgage.
For a while there, borrowers had a bit of hope. Until recently, Westpac had expected the RBA's next move to be a rate cut in 2027. That hope has now faded.
Westpac was the last of the Big Four to hold out, but it's changed its tune. All four major banks, ANZ, CBA, NAB, and Westpac, are now forecasting another rate rise before the end of the year. All four are forecasting a 25bp increase, with NAB tipping September and the others leaning towards November. The Reserve Bank of Australia's next monetary policy meeting is scheduled for 28–29 September, with the decision due on 29 September, and inflation is still sitting above its target band, so this isn't just bank talk. It's a real possibility borrowers need to plan for.
As a mortgage broker, this is the part of the cycle where preparation really pays off. Here's what I'd be telling my clients right now.
Check your borrowing capacity again. Lenders stress-test every application against a buffer above today's rates. For APRA-regulated lenders, the serviceability buffer remains 3 percentage points. If home loan rates rise, the assessment rate can also rise, which may reduce borrowing capacity, so what you could borrow six months ago may not be what you can borrow today. It's worth knowing where you stand before you fall in love with a property.
Stress-test your repayments. Don't just budget for today's rate. Sit down and work out what your repayments would look like with one or two more rate rises factored in. If that number feels uncomfortable, it's better to know now than after settlement.
Get your existing loan reviewed. Loyalty doesn't always pay in home lending. Lenders often offer sharper rates to new customers than they do to existing ones. A loan health check can show you exactly where you stand and whether it's time to ask for a better deal or move.
Rethink fixed versus variable. With rates on the move, this is worth a proper look rather than a gut decision. A split structure can combine some fixed-rate repayment certainty with some variable-rate flexibility, although features, break costs and repayment conditions should also be considered. We've covered how these work in more detail in our recent piece on fixed-rate home loans.
Compare lenders properly. Not every bank will move at the same time or by the same amount. The gap between the sharpest and the priciest lender can be significant, and that's where having someone in your corner, comparing suitable options across the broker’s lender panel, actually makes a difference.
First-home buyers, get finance-ready early. Pre-approval can give an indicative borrowing range and one less thing to worry about while rates are shifting.
Investors, revisit your cash flow. A further rate rise may affect repayments, cash flow and borrowing capacity across a property portfolio, particularly where loans are on variable rates.
If your current loan no longer feels competitive, refinancing might be worth exploring. Either way, the borrowers who come through a rising rate environment in the best shape are usually the ones who planned ahead rather than reacted.
Ready to make your move? For tailored advice or to discuss your borrowing power, contact KM Financial Service. Call us on 0402 879 531 or book a free consultation today. We're here to help you plan with confidence and find the right loan for your situation.
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