Three hikes have already taken $35,800 off what a single average earner can borrow. The fourth is being written into loan calculators now, and ANZ expects a fifth before Christmas.
All four majors now expect the Reserve Bank to lift the cash rate at its 29 September meeting, on Canstar's tracking of their published calls (as at 21 September 2026). Commonwealth Bank, NAB and Westpac put the peak at 4.60%. ANZ goes further, tipping a second hike on 3 November that would take the cash rate to 4.85% by year's end.
One number did the work. Australian Bureau of Statistics figures for July 2026 put headline inflation at 3.5% but trimmed mean inflation, the RBA's preferred underlying measure, at 3.6%. Core is now running above headline, which is what economists mean by sticky. For anyone borrowing, the consequence arrives before the rate does: lenders reprice their serviceability calculators within days of a decision, and the capacity is gone before the repayment changes.
The Core Data and Index Shift
The ABS July release is the document doing the damage. Headline inflation eased to 3.5% over the year, but the trimmed mean held at 3.6%, above the RBA's 2% to 3% target band and above the headline rate it is meant to lead. Housing was the largest contributor, up 5.0% over the year, with rents up 3.6%.
Borrowing capacity is falling faster than prices. Canstar modelling reported in June found the three hikes delivered this year cut roughly $35,800 from a single average-wage borrower's maximum loan and $71,600 from a dual-income couple's. Two further hikes, which is ANZ's call, would take those figures to $57,600 and $115,200, close to 10% of a single buyer's budget. Over the same stretch Cotality has national dwelling values down 0.9% for August. The buyer loses capacity faster than the market hands back price, which is why cheaper housing has not made buying easier.
John Angga
Structural and Policy Drivers
The Reserve Bank held at 4.35% on 11 August 2026 and said trimmed mean inflation remains elevated and is not expected back at target until late 2027. The Board added that it would raise rates further if upside risks materialised. The majors have now taken it at its word.
The shift was fast. On 27 August, Westpac still carried no further hike in its forecast. By 10 September it had joined the other three at 4.60%, citing stronger than expected household incomes and spillovers from data centre construction as evidence that demand is more resilient than the RBA had assumed. Three of the four were tipping November as recently as mid-September. All have since pulled the call forward to the 29th, and ANZ has added a November hike on top.
| Bank | Peak rate | First cut |
|---|---|---|
| NAB | 4.60% | Aug 2027 |
| Commonwealth Bank | 4.60% | Aug 2027 |
| Westpac | 4.60% | Aug 2027 |
| ANZ | 4.85% | Nov 2027 |
APRA is the multiplier. The serviceability buffer stayed at 3 percentage points on 28 May 2026, so a cash rate move flows straight through to the rate borrowers are tested at. Canstar's Sally Tindall has put current assessment rates above 9%. A borrower who will actually pay around 6% is being assessed at a rate they may never see, and every hike lifts that test again.
Practical Implications for Portfolio Strategy
Check the expiry date on any pre-approval before you bid. Most run about 90 days, so an approval issued this week expires after both the September decision and any November follow-up have washed through lender pricing. Ask in writing what your approved figure becomes at an assessment rate 25 basis points higher, and get that answer before you go to auction.
For most investors the binding constraint is no longer the deposit; it is serviceability.
That changes what a spare $20,000 is best used for. Reducing an undrawn credit card limit or clearing a personal loan can lift borrowing capacity more than adding the same sum to a deposit, because lenders assess the limit rather than the balance. Confirm with your broker how your lender treats undrawn limits and HELP (HECS-HELP student loan debt) repayments, since the treatment varies.
Rental income does some of the work. Cotality's August figures have units returning a gross 4.6% nationally against 3.5% for houses, and that income line feeds directly into the serviceability assessment.
Treat the forecast cuts as forecasts. CBA, NAB and Westpac pencil in the first cut for August 2027, ANZ not until November 2027. Fixing long at the top of a cycle only pays if rates stay there, and none of the four expect that.
Edward Abella
What to Watch Before December
Three dates settle this. The Board announces on 29 September, the first real test of whether the hawkish repricing was early or right. The next ABS inflation reading does not land until 30 September, the day after, so the Board decides on the July numbers. The trimmed mean, not the headline, is the line that matters.
Then 3 November, which arrives with a quarterly Statement on Monetary Policy. That document is where the RBA shows whether it still expects inflation back at target in late 2027 or has pushed the date out again. If it has, 4.60% stops being a peak and starts being a waypoint, and the borrowing capacity figures above become the optimistic case.
