What mortgage holders should do before the next RBA decision
2 min
Borrowers cannot control the Reserve Bank, but they can control how exposed their household budget is to its next decision.
The RBA meets on 29 September with inflation concerns still elevated and major-bank economists increasingly bringing forward their rate-rise calls. Fixed mortgage rates have also been moving, reducing the value of waiting for perfect certainty.
The first task is to calculate the impact of another 0.25 percentage-point increase. Indicative Canstar figures reported earlier this month suggest that such a move would add about $91 a month to repayments on a $600,000 loan, $122 on $800,000 and $152 on $1 million, although actual changes depend on rate, term and loan structure.
The second task is to compare the current loan with the market. Borrowers should examine the interest rate, annual package fee, offset balance, redraw rules and the revert rate on any expiring fixed portion. A lower advertised rate is not necessarily a better deal after fees, lost features or refinancing costs.
Third, test the household budget at least one percentage point above the current rate. This is not a forecast; it is a resilience exercise. Include council rates, strata, insurance, maintenance, school costs and realistic discretionary spending. Investors should also allow for vacancy and repairs rather than assuming uninterrupted rent.
Fourth, contact the existing lender before lodging multiple applications. A borrower with a sound repayment history may be able to negotiate a discount without refinancing. If the offer is weak, obtain comparable quotes and seek advice on whether changing lenders will genuinely improve the position.
Fifth, preserve liquidity. Using every available dollar to reduce principal may feel prudent, but an offset account can provide interest savings while retaining access to cash. The right structure depends on tax position and loan purpose, particularly where owner-occupied and investment debt coexist.
Borrowers considering a fixed rate face a trade-off. Fixing can provide repayment certainty, but may restrict additional repayments, offsets or early exit. Splitting a loan can diversify rate exposure without removing risk.
The worst time to examine a mortgage is after repayments have become unmanageable. A review conducted now gives borrowers more choices: renegotiate, refinance, adjust spending or build a buffer while their record remains strong.
Borrower checklist
Calculate: Repayments after a 0.25 and one percentage-point increase.
Compare: Rate, fees, offset, redraw, cashback conditions and total cost.
Review: Fixed-rate expiry, interest-only expiry and remaining loan term.
Protect: Emergency liquidity and insurance.
Borrowers cannot control the Reserve Bank, but they can control how exposed their household budget is to its next decision. The RBA meets on 29 September with inflation concerns still elevated and major-bank economists increasingly bringing forward their rate-rise calls. Fixed mortgage rates have also been moving, reducing the value of waiting for perfect certainty. …
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Australian shares finished higher on Tuesday, September 22, as a technology rally and lower oil prices outweighed weakness in energy companies and continued anxiety about domestic interest rates. The S&P/ASX 200 closed 25.9 points, or 0.30 per cent, higher at 8,757.8. The All Ordinaries gained 0.36 per cent to 8,951.0, while the All Technology index …
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Australia’s housing challenge is increasingly about conversion: moving approved projects through finance, commencement and completion.
2 min
Australia’s housing debate often treats a development approval as though it were a completed home. In practice, the distance between those two milestones can stretch for years—and a growing number of projects never cross it.
The National Housing Supply and Affordability Council reported in August that approximately 308,000 homes had been completed since the Housing Accord period began, roughly one quarter of the national target. It also identified 244,000 dwellings under construction in the March quarter, the largest pipeline recorded since 1984, while approvals and commencements had improved against their pre-Accord comparisons.
Those numbers show activity, but they also expose the conversion challenge. A planning consent establishes what may be built. It does not lock in the price of labour and materials, guarantee a construction loan or persuade enough buyers to sign unconditional contracts.
For apartment developers, the first hurdle is feasibility. Land, consultant, authority, finance and construction costs must be covered by realistic sales revenue. When building prices rise faster than achievable apartment values, a project can be approved and still be economically unbuildable.
The second hurdle is debt. Financiers typically require substantial equity, a fixed or sufficiently certain building contract and presales to acceptable purchasers. Valuers may discount speculative pricing, while lenders can treat contracts with long settlement periods or highly concentrated buyer profiles cautiously.
Presales form the third constraint. Owner-occupiers may prefer to see construction under way before committing; developers often need commitments before construction can begin. This circular dependency is particularly difficult for first-time developers and projects in untested locations.
The practical metric for policymakers and the industry is therefore not approvals in isolation, but conversion: how many approved dwellings progress to finance, commencement and completion, and how long each step takes.
There are no simple fixes. Faster planning can reduce holding costs, but cannot rescue an unviable scheme. Government-backed finance can help suitable projects, but should not disguise unrealistic land values. Standardised design and modern construction methods may improve productivity, provided procurement risk and quality control are addressed.
For buyers, an approval or sales launch should be viewed as the start of the delivery process—not proof that a home will exist on schedule. The most relevant questions concern finance, builder appointment, sunset provisions, deposits and the developer’s record of completing comparable projects.
Australia has made progress in filling the front end of the housing pipeline. The next challenge is getting those homes out the other end.
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