RBA interest rate decision: a fifth hike looms over a stalled spring market
The Reserve Bank's deputy governor has put a November rate rise firmly in play. Agents head into the decision after six straight months of falling values and clearance rates below 50 per cent.
The Reserve Bank of Australia will hand down its next interest rate decision on Tuesday 3 November, Melbourne Cup Day, with a fifth rise this year now a live prospect. A rise would take the cash rate to 4.85 per cent, its highest level since 2008.
The case for a move strengthened on 21 October, when deputy governor Andrew Hauser told Citi’s investment conference in Sydney that the inflation outlook was “materially worse” than the bank had forecast in August. He said a growing share of businesses were starting to treat inflation of 3 to 3.5 per cent as normal, above the RBA’s 2 to 3 per cent target band.
Markets moved quickly. Pricing for a November rise climbed above 50 per cent after the speech.
The last major test before the board meets lands on Wednesday 28 October, when the Australian Bureau of Statistics releases September quarter inflation. Governor Michele Bullock is also due to speak that day.
Where the banks sit on the November decision
The major banks are split. ANZ and Westpac expect a 25 basis point rise to 4.85 per cent. Commonwealth Bank is holding to a forecast of no change, though it has said the risk of further increases is building. NAB expects the cash rate to stay at 4.60 per cent. Goldman Sachs and UBS have both moved to forecast a November rise.
The cash rate already sits at 4.60 per cent after the board’s 29 September decision, its fourth increase of 2026 following rises in February, March and May. The big four banks passed that increase on in full to variable home loan customers from 9 October.
What it means for borrowers
A further 0.25 percentage point rise would add about $153 a month to repayments on a $1 million loan, according to calculations published by The New Daily. Across five increases this year, repayments on that loan would be about $759 a month higher than at the start of 2026.
A market already under pressure
Agents would be absorbing the rise in a market that has been falling since autumn. Cotality’s Home Value Index fell 1.1 per cent nationally in September, the sixth consecutive monthly decline, leaving values 5.2 per cent below their March peak. Cotality reported that 97 per cent of capital city suburbs lost value over the three months to September.
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Sydney is 8.6 per cent below its February peak. Brisbane recorded the steepest monthly fall of any capital in September, down 1.5 per cent.
The auction market tells the same story. The final combined capital city clearance rate fell to 44.1 per cent in the week ending 11 October, meaning fewer than half the homes taken to auction sold. It was the lowest weekly result since late June and 24.1 percentage points below the same week in 2025. The clearance rate has now fallen for four consecutive weeks, and with auction volumes also well below last year, Cotality said buyer demand appeared to be the main constraint. Brisbane cleared 21.8 per cent, close to an 18-year low.
Cotality economist Annabelle Mezieres said the September increase had likely contributed to the weaker auction results in early October, as buyers faced reduced borrowing capacity and subdued confidence.
Homes are also taking longer to sell. Cotality’s October chart pack estimated 39,747 homes sold nationally in September, down 20.9 per cent on a year earlier, while advertised listings were 19.1 per cent higher. The median time to sell in the capitals stretched to 39 days, up from 23 days a year earlier.
The jobs market has also softened. Unemployment rose to 4.7 per cent in September, its highest level in five years, as employment fell by 39,300. Hauser acknowledged earlier rate rises were weighing on activity but said that did not remove the risk of persistent inflation.
What the RBA decision means for agents
A November rise would cut buyers’ borrowing capacity again during the busiest weeks of the spring selling season. With stock already building, fewer homes selling at auction and properties taking longer to sell, the data point to a widening gap between what vendors expect and what buyers can pay.
The Reserve Bank will announce its decision at 2.30pm Sydney time on Tuesday 3 November.
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