RBA Signals Potential Pause After Rate Hike

The Reserve Bank of Australia has lifted the cash rate by another 0.25 percentage points to 4.85%, taking borrowing costs to their highest level since late 2008. It was the fifth rate increase of 2026.

While the increase adds further pressure to mortgage holders and buyers, Governor Michele Bullock also suggested the RBA may now pause to assess how the recent tightening is flowing through the economy.

Bullock said that with five increases now in the system, and the latest rises not yet fully affecting households and businesses, it may be a good point for the Board to “take stock” and watch incoming economic data. However, she also stressed that the next move remains uncertain and inflation risks are still tilted to the upside.

For buyers in Melbourne’s western growth corridor, even the possibility of a pause could reduce some of the uncertainty that has weighed on confidence. Buyers may feel more comfortable making decisions if they believe borrowing costs are approaching a near-term peak.

However, affordability remains difficult. A 4.85% cash rate continues to translate into higher mortgage rates, reduced borrowing capacity and larger repayments compared with conditions only a year ago.

Sellers may also benefit from greater rate stability if it encourages more buyers to return to inspections and auctions, although price sensitivity is likely to remain high.

For investors, a pause would provide more certainty when assessing cash flow, yields and finance costs, but it would not immediately reverse the impact of the five rate increases already delivered this year.

Overall, the RBA’s November decision remains restrictive, but the signal that policymakers may pause and assess conditions could provide some breathing room for Melbourne’s property market. Whether that translates into stronger activity will depend on inflation, employment and how borrowers respond to the higher rates already in place.