Australian mortgage holders have been warned they may not receive any rate relief over the next 12 months, as banks quietly increase interest rates.
The headline consumer price index fell to 3.4 per cent in November, down from 3.8 per cent in October. Economists had expected a smaller drop, to 3.6 per cent.
However, the trimmed mean, the Reserve Bank’s preferred measure of underlying inflation, eased only slightly, edging down from 3.3 per cent to 3.2 per cent.
It remains above the RBA’s two to three per cent target band, which would enable a rate cut.
The RBA will next meet on February 3, but Oxford Economics Australia’s Harry Murphy Cruise has warned that it will hold interest rates in 2026.
‘With inflation back above target and domestic demand surging, rate cuts are off the table for 2026,’ he told news.com.au on Monday.
‘We think the RBA will choose patience.’
‘As recently as August, both we and the RBA expected trimmed-mean inflation to be comfortably around the midpoint of the target band by year-end. That clearly didn’t happen,’ Mr Murphy Cruise said.
Mortgage holders have been warned they may not receive any rate relief in 2026 (stock image)
The headline consumer price indexfell to 3.4 per cent in November, down from 3.8 per cent in October. Economists had expected a smaller drop, to 3.6 per cent (stock image)
The economic consultant has said modelling projects unemployment will rise by around 30 basis points from 4.3 to 4.6 per cent.
This, he suggested, would bring about the same decline in inflation as an interest rate hike.
‘The combination of still restrictive rates and higher unemployment will push underlying inflation down to 2.8 per cent by the end of the year, and return to the middle of the target band by 2027,’ Mr Murphy Cruise said.
‘Working-age participation is edging lower, underemployment is drifting higher, and forward indicators such as job ads suggest firms are becoming more cautious about hiring.
‘The economy’s recent resilience suggests the current cash rate is less restrictive than we previously assumed. As a result, we’ve raised our estimate of the neutral rate to 3.35 per cent, from 3.1 per cent.’
The warning comes less than a week after one of Australia’s Big Four banks, Commonwealth Bank, quietly increased interest rates.
CBA customers on three-year fixed rate mortgages face the largest increase with a 0.7 per cent rise to 6.19 per cent for owner occupiers and 0.6 per cent to 6.24 per cent for investors.
The lowest fixed rate at CBA is now a two-year fixed loan for an owner occupier at 5.94 per cent after a 0.35 per cent rise.
The Reserve Bank (RBA) will next meet on February 3 (pictured RBA Governor Michele Bullock)
The change applies to new borrowers and existing customers switching to a fixed rate.
Macquarie Bank this week also lifted its interest rates by 0.25 per cent across all fixed loans.
For impacted customers now shopping around for a better deal, a two-year fixed rate for an owner occupier is at 5.59 per cent at Westpac and 5.44 per cent for ANZ.
NRMA Insurance offers the lowest two‑year fixed rate at 5.29 per cent on a $500,000 loan, followed by Suncorp and NAB on 5.39 per cent, according to Canstar.
Both CBA and NAB expect the RBA to raise the cash rate by 0.25 per cent on February 3, following a series of cuts last year, despite rising inflation.
