In its final board meeting of the year, the Reserve Bank of Australia (RBA) has kept the cash rate on hold. This follows three cuts this year, with the cash rate currently sitting at 3.60%.
Most of the big banks now believe the cash rate will remain on hold well into 2026, which will likely mean variable interest rates remain fairly steady.
For first-homebuyers, this could provide more certainty on the amount you could borrow. While cash rate and interest rate cuts can be a contributing factor to rising house prices, other factors such as construction costs and supply shortages could see these continue.
If you already have a home loan, there are a number of things to consider in 2026.
1. Cashbacks aren’t always a good choice
While they can provide a bit of a sugar hit to the pocket, refinancing to another loan for the cashback may not be a wise choice. Other factors such as fees, interest rates and terms or features can play a larger role in the overall cost saving you could get from refinancing. It is a good idea to look beyond the initial cash to see the longer-term costs and benefits – you may just find another loan that doesn’t offer a cashback actually provides greater savings.
2. Just because interest rates are stabilised doesn’t mean you shouldn’t check yours
Even if it looks like there won’t be a rate cut in the near term doesn’t mean you couldn’t get a lower interest rate. Regular rate checks and reviews are important to make sure your rate remains competitive. This could entail repricing your home loan with your existing lender (particularly if they are offering lower interest rates to new customers) or refinancing to a better deal elsewhere. Remember – lenders are competing for customers.
3. Weigh up fixed vs variable
At the moment, you may find some fixed rates that are lower than variable. Your decision between fixed and variable comes down to your personal circumstances and preferences. A fixed rate can be helpful should interest rates predominantly increase during your loan term, but could also be restrictive should they predominantly decrease.
Reach out to your local Loan Market broker to discuss the right strategy for you.
