The end of the year has brought a mix of steady and shifting signals across rates, housing affordability, and employment. And while the headlines can feel overwhelming, they all boil down to one simple question most people ask:
“What does this mean for my mortgage?”
The RBA has held the cash rate at 3.60% again, marking the third straight pause. On the surface, a pause sounds like good news — but it doesn’t mean repayments are getting easier anytime soon.
Inflation is still running hotter than the RBA would like, and economists expect rates to stay higher for longer.
If you already have a mortgage:
- Your monthly repayments won’t change for now
- The chance of a rate cut soon remains low
For new borrowers:
- Slight rate cuts earlier in the year improved borrowing capacity
- Rising living costs continue to reduce those gains
RATES ARE ON HOLD — BUT PRESSURE ISN’T GOING AWAY
As a broker, the focus in this period is on:
- Repricing loans
- Reviewing structures
- Finding room to create breathing space
A rate pause doesn’t mean your loan strategy should stay paused too.
HOUSING AFFORDABILITY HAS IMPROVED — BUT ONLY SLIGHTLY
Affordability has ticked up for the third quarter in a row.
Families are now using 47% of their income on average mortgage repayments — a small but meaningful improvement.
But the story underneath is more complex:
- First-home buyer activity has softened
- Loan sizes for first-home buyers and owner-occupiers continue to rise
- Affordability varies significantly by state
- Rental pressures remain strong nationally
The gains we’re seeing are helpful — but not enough to say affordability issues are easing in a lasting way.
Demand is still strong.
Supply is still tight.
Values in lower-priced segments are rising the fastest.
That’s why many first-home buyers and upgraders are leaning more heavily on:
- Government schemes
- Low-deposit pathways
If you’re planning a purchase in 2026, now is the time to map out your borrowing options properly.
AUSTRALIA’S JOB MARKET IS HOLDING FIRM — AND THAT AFFECTS RATES TOO
Unemployment remains steady at 4.3%, signalling a labour market that’s still tight.
Stable employment is positive for households. However:
- A strong labour market can keep inflation elevated
- That keeps pressure on interest rates
Some market analysts have warned that if inflation continues upward, the RBA may need to consider rate hikes in 2026 — rather than cuts.
APRA’S NEW 20% DTI RULE: WHAT IT MEANS FOR HOMEBUYERS, INVESTORS AND REFINANCERS
From 1 February next year, banks will be allowed to write up to 20% of new lending to borrowers whose Debt-to-Income (DTI) ratio is 6 or higher.
This doesn’t eliminate high-DTI lending — but it limits it.
That changes how banks assess applications.
Banks will now:
- Prioritise stable, lower-risk applicants
- Be cautious with large loans relative to income
- Spread high-DTI lending across the year
- Rely more on brokers to match borrowers with suitable lenders
Borrowing isn’t harder — just more selective.
NEW GOVERNMENT SUPPORT: THE HELP TO BUY SCHEME
One of the biggest updates for buyers entering the market is the introduction of the Help to Buy Scheme, a shared equity program designed to reduce upfront costs.
Here’s how it works:
- The government contributes up to 40% for a new home
- Or up to 30% for an existing home
- You only need a 2% deposit
- No LMI (Lenders Mortgage Insurance)
- You live in the home — the government holds a share
- When selling (or buying out the share), you repay proportionally
This scheme may be a game-changer for buyers with strong income but limited savings — especially with DTI caps affecting borrowing power.
SO, WHAT SHOULD BORROWERS AND BUYERS DO NOW?
The current market is a balancing act:
- Stable rates (for now)
- Gradual affordability improvement
- Strong employment conditions
But lending rules and living costs mean buyers need to be strategic.
Practical Steps:
1. Review Your Current Loan
Repricing or refinancing may still deliver savings.
2. Map Out Your Borrowing Strategy Early
Planning matters more than ever.
3. Keep an Eye on Your DTI
Credit card limits, BNPL accounts, and car loans can push you over the threshold. Cleaning these up early can increase borrowing capacity.
If you’re looking to refinance, buy your first home, or invest — proper advice can make a major difference.
If you’d like help reviewing your situation or exploring these schemes, we’re here to guide you step by step.
