For most of this year, the property conversation assumed one thing: the next move in interest rates would eventually be down. That assumption is now being questioned. After a run of stronger economic data, some economists have flipped their forecasts and warn the Reserve Bank’s next move could actually be another rate rise. It’s a meaningful shift in the outlook, and it matters for anyone with a mortgage or planning to buy. Here’s the plain-language guide.
What’s Changed
The RBA has held the cash rate at 4.35 per cent since pausing after three rises earlier in the year. Until recently, the consensus was that the next move would be a cut, most likely around mid-2027. That view is now less certain.
Following recent data, some economists now suggest a rate rise could come in the next few months, rather than a cut. It’s not the consensus, plenty still expect the next move to be down eventually, but the fact that a hike is back on the table at all marks a genuine shift in sentiment from just weeks ago.
Why the Shift
The change comes down to persistent inflation and a resilient economy. When inflation stays stubbornly above the RBA’s 2 to 3 per cent target band, and the labour market remains strong, the Bank has less reason to cut and more reason to consider tightening further to bring inflation down.
“Some economists now expect the rate rise in the next few months,” recent market analysis noted, a reversal from the earlier expectation of cuts.
At the same time, other data (softer employment and wage figures in some readings) has been pointing the other way, which is exactly why forecasters disagree. The honest picture is genuine uncertainty, with the balance of risk having shifted enough that another rise can no longer be ruled out.
What It Means If You Have a Mortgage
The practical message is to prepare for the possibility rather than assume relief is coming. If you’re on a variable rate, model what another 0.25 per cent rise would do to your repayments now, while it’s hypothetical, so it’s not a shock if it happens. Don’t budget on the assumption of imminent cuts, because that assumption is exactly what’s being questioned. And remember lenders can move rates independently of the RBA, so comparing your loan remains worthwhile regardless.
Building or maintaining a buffer in your repayments is the sensible response to genuine uncertainty, it costs little if rates hold or fall, and protects you if they rise.
What It Means If You’re Buying
A shifting rate outlook is a reminder not to over-extend. If you’re buying, stress-test your borrowing against a higher rate, not just today’s, so you’re comfortable even if rates rise. The current soft market gives you negotiating room, but that’s no reason to stretch to your absolute borrowing limit when the rate outlook is uncertain. Factor the possibility of a rise into your offers and your budget, and you’ll buy with a margin of safety rather than a gamble on rates falling. This is general information, not financial advice.
What It Means If You’re Selling
For sellers, a potential rate rise adds to the case for realistic pricing. If rates rise, borrowing power shrinks further, which pushes buyer budgets, and therefore prices, down. In a market already soft, that reinforces the need to price to current conditions rather than hoping for a rebound. A rate rise would cool demand further, so meeting the market matters even more.
The Bottom Line
The forecast has genuinely shifted: after months of expecting the next move to be down, some economists now warn the RBA could raise rates again in coming months. It’s not certain, and views differ, but a hike is back on the table, and that uncertainty is the real message. Don’t budget on cuts that may not come, stress-test against a rise, keep a buffer, and make your property decisions on your own numbers rather than a forecast that just flipped.
Epik Wire covers the property market in plain language for buyers, owners and borrowers. Subscribe to our newsletter to stay informed.
