RBA Warns Inflation Could Stay Higher For Longer: What It Means For Your Mortgage
Reserve Bank of Australia (RBA) Governor Michele Bullock told Parliament in Canberra last week that inflation may stay above target for longer than the market had hoped. That's not the news anyone wants to hear right now, especially with the RBA's next board meeting locked in for 28–29 September and markets already pricing in a 93% chance of another rate hike.
As mortgage brokers, we spend a lot of time reading between the lines of what the RBA says. And this update is worth paying attention to.
What's actually going on
Bullock pointed to two things pushing prices up: ongoing tension in the Middle East, which is keeping oil and shipping costs elevated, and the global AI boom, which is putting pressure on prices for AI-related technology. Add that to July's inflation figures, where headline CPI sat at 3.5% and the trimmed mean at 3.6%, both still above the RBA's 2–3% target band, and it's easy to see why the central bank is cautious about cutting rates any time soon.
The RBA cash rate in 2026 has already been lifted three times, and now sits at 4.35%. Another increase would add more pressure to household budgets that are already stretched by cost-of-living increases, tighter borrowing capacity, and a revised federal budget.
Why this matters if you've got a mortgage
Mortgage rates across Australia are already elevated, and if you're on a variable rate, another hike means higher repayments. If you're coming off a fixed rate soon, the gap between what you were paying and what you'll pay on the revert rate could be bigger than you're expecting. And if you're planning to buy, your borrowing power may be tighter than it was a few months ago.
We're already seeing some clients start to feel the pinch, and it's pushing a few to consider downsizing or selling investment properties rather than stretching their budget further. That's a completely understandable response, but it's not the only option.
What we'd suggest doing now
This isn't the time to sit on your hands and hope for the best. A few practical steps:
- Check your current rate. If you haven't reviewed your loan in the last 12 months, there's a good chance you're paying more than you need to. Our loan health check is a good place to start.
- Know your borrowing capacity before you shop. Rate changes affect how much you can borrow, not just what you repay. Our borrowing capacity calculator gives you a realistic picture.
- If you're coming off a fixed rate, plan ahead. Don't wait until the last minute. Check our fixed rate expiry page for timing tips.
Ready to make your move?
With 20 years of experience helping clients right across Australia, KM Financial Services can give you tailored advice on your buying strategy. If you want to take it a step further, call us on 0402 879 531 or book a free consultation today. KM Financial Services is here to guide you and help you secure the right position in the market, whatever the RBA decides next.
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