Pressure on households mounts on back of another rate rise

PRESSURE on families already dealing with high household costs and inflation will only intensify on the back of Tuesday’s RBA decision to increase mortgage rates.

Real estate Institute of Australia President Jacob Caine said the rate rise would be felt in household budgets and could force more people to reconsider buying, selling or moving.

The Reserve Bank ended weeks of speculation to bump rates to an 18-year-high of 4.85 per cent. The move proved a safe bet on Melbourne Cup Day.
“Families are already under real pressure. Another rate rise adds to the cost of borrowing and makes it harder for people to plan their next step in the housing market,” Mr Caine said.
“Inflation remains above the Reserve Bank’s target, and the Board has used its cash-rate lever to try to bring it down. But the burden cannot fall on households alone.

“Governments must also avoid spending that adds unnecessary demand and tackle the supply constraints keeping housing costs high.”
Annual trimmed mean inflation was 3.7 per cent in the September quarter, up from 3.6 per cent in the June quarter and above the Reserve Bank’s 2-3 per cent target band.
REIA’s latest Housing Affordability Report, covering the June quarter of 2026, found that average home-loan repayments absorbed 50.9 per cent of median family income, with monthly repayments up 12.4 per cent over the year. Nationally, rent accounted for 23.9 per cent of median family income.
“The cash rate is now 50 basis points higher than it was on 30 June. REIA’s June-quarter figures show that many households were already stretched before the two subsequent rate increases. Higher borrowing costs are likely to put further pressure on housing affordability in the coming quarters,” Mr Caine said.
“Interest rates can help bring inflation down, but they cannot build homes. Governments need to speed up planning and approvals, coordinate infrastructure with housing growth, strengthen construction capacity, and maintain stable settings for investment in new homes and rental properties.”
Mr Caine said governments should act now to reduce the risk that housing supply constraints and higher financing costs will further limit Australians’ options to buy or rent.
“Households should not be left carrying the weight of inflation control on their own. With the RBA having raised rates, governments must now show they are doing their share to ease pressure and support the delivery of more homes,” he said.