Reserve Bank rate hold sparks fears of future hikes for borrowers
Cost of living pressures continue to mount on everyday Australians as inflation accelerates and interest rate cuts remain out of sight.
The wait for interest rate relief will go on for borrowers, after the Reserve Bank of Australia (RBA) chose to hold rates at 3.60 per cent in its final cash rate call of the year.
The latest hold decision means the central bank has now left rates unchanged for three consecutive cash rate calls, last cutting them in August this year with a 0.25 per cent drop.
Pressure is mounting on borrowers as rates hold steady and underlying inflation accelerated to 3.0 per cent for the September quarter to hit the top of the RBA’s 2–3 per cent target band.
The cost of borrowing and rising inflation are putting pressure on many households including Mosman family Chris and Deb Walton, and their five children.
“The cost of living has been an ongoing challenge for many years because I’ve got a large family, so there’s a lot to take care of,” Mr Walton said.
“You have to prioritise and make choices about what you do have and what you go without. We’ve certainly had to make those.”
Mortgage stress across New South Wales also remains high, despite three cash rate cuts in 2025.
Almost 560,000 households in the state were in mortgage stress at the end of September, according to Digital Finance Analytics data, making up more than 51 per cent of NSW households with a home loan, up from 49 per cent in January.
“Mortgage stress” was defined as a situation where monthly household income was insufficient to cover mortgage payments and other outgoings regularly.
To help ease cashflow pressure, the Waltons took out a loan through non-bank lender Midkey, which targets homeowners that need cashflow flexibility alongside an existing mortgage.
Alternative home‑equity loans like those arranged by Midkey aim to ease cashflow stress by providing equity access with no monthly repayments.
Commenting on housing accessibility, Mr Walton said he wondered how his children could get on the property ladder with Sydney’s “eye-wateringly high” house prices.
“I suppose many people wonder about it, especially those with kids… It might be that we will start to see Australia go the same way as mainland Europe, where there’s more of a culture of renting for life than there is of buying a property,” he said.
“Or you’ve got the thought of living in different parts of Australia. I’m not saying any of these are easy, but they are just pure practical solutions. There might be more apartment living in the future.”
Looking ahead, rising inflation has dampened hopes of rate cuts in 2026 and led some economists to forecast an end to the rate easing cycle and a switch to rate hikes.
Last month, National Australia Bank’s (NAB) economics team updated its forecast, suggesting an end to rate easing this cycle.
The bank’s chief economist Sally Auld even said rates could potentially go up next year.
The Commonwealth Bank of Australia (CBA) is also forecasting no further rate cuts in this cycle while Australia and New Zealand Bank (ANZ) economists expect rates to be on “an extended hold”.
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Originally published as Reserve Bank rate hold sparks fears of future hikes for borrowers
