As major banks mull home loan repricings, broking industry urged to guide clients through the noise
Australian homeowners were delivered a blow on Tuesday when the Reserve Bank of Australia (RBA) opted to increase the cash rate by 25 basis points to 3.85%.
It was the first rate hike in over two years, thanks to a reemergence of inflationary pressures, coupled with an incredibly strong labour market.
While it shouldn’t have come as a surprise, given every major bank accurately predicted a 25-basis-point rate hike, it still won’t be easy to digest higher monthly repayments.
“What this means for an average household mortgage of $694,000 is an extra $109 in monthly repayments, which will be felt most by borrowers who reduced repayments during the last easing cycle,” said Anja Pannek (pictured, far left), chief executive of the Mortgage and Finance Association of Australia.
“The higher rate environment also makes it tougher for first home buyers looking to take advantage of the Australian Government 5% Deposit Scheme, as higher rates can reduce borrowing capacity for those trying to enter the market," Pannek added.
To run salt in the wound, it is becoming increasingly possible that more rate hikes are on the agenda. As Indeed economist Callam Pickering said: “It’s unlikely that the RBA will hike rates only once and we expect them to deliver a further hike in May. A lengthy hiking cycle though appears unlikely, with inflation set to moderate somewhat.”
But despite the new rate reality, “it does not mean borrowers are out of options”, Pannek said. “The smartest step borrowers can take is to speak to their mortgage broker. Brokers can explore a range of options and that includes options to improve serviceability, securing a sharper rate with an existing lender, refinancing to a different lender or consolidating debt to improve cash flow.”
Borrowers urged to shop around
“I urge borrowers to consider how prepared they are for their home loan interest rate to rise,” said Mortgage Choice chief executive Anthony Waldron (pictured, centre left). “If your home loan interest rate went up by 25 basis points, what impact would those larger repayments have on your lifestyle? If you need help answering that question, speak to a mortgage broker.
“They’ll help you understand whether you can save by switching to another home loan product or lender so you can get ahead of any further rate hikes.”
Peter White (pictured, far right), managing director of the Finance Brokers Association of Australia (FBAA), struck a similar tone, urging brokers to help clients avoid nasty lender loyalty taxes, potentially through refinancing to a competing lender.
Waldron advised those looking to buy in the shadow of the RBA’s decision to “sharpen your strategy”.
“If buying your first or next home is part of your plans for 2026, a rate hike will likely have an immediate impact on your borrowing power,” he said. “If you secured home loan pre-approval in the last couple of months, check in with your broker because you might not qualify for the same amount today.
Read more: Major banks ‘reviewing’ mortgage costs following RBA rate hike
Waldron also warned against assuming a bank's first answer is their only option. “Each lender views risk differently, so what one bank says you can borrow may be very different to what another lender can offer you. My advice to anyone feeling uncertain is simple: don't leave things up to chance. Let a broker do the legwork to find the lender that fits your unique needs.”
The strengthening role of brokers
“Today’s rate increase adds further pressure for borrowers who have already absorbed a prolonged period of higher costs,” said Mark Haron (pictured, centre right), executive director at mortgage aggregator Connective. “Households are facing tougher decisions about spending, repayments, and cash flow. Homeowners are more likely to pause upgrades, investors are approaching opportunities cautiously, and small business owners are prioritising essential commitments.”
Haron expects the rate hike to compress volumes in the short term, although it presents an opportunity for brokers “to strengthen their role as trusted financial intermediaries in a complex, volatile rate environment”.
He said: “To remain competitive, brokers should focus on providing strategic advice in areas such as pre-approvals, running scenario planning, and helping borrowers assess whether rising property values create opportunities to restructure or upgrade.
“Reviewing loan structures, stress-testing repayments, and guiding practical decisions are critical. Brokers who step in with timing, insight and actionable advice are the ones truly delivering value.”
Impact on SMEs
Paul Evans, national sales manager at SME specialist Prospa, reckons the addditional pressure on households resulting from the hike will have a flow-on effect to small business owners.
That being said, while conditions are tighter, SMEs remain resilient and ready to adapt, even though costs are high, inflation remains sticky, and cashflow can come under strain more quickly than it used to.
"At the same time, Australia’s labour market and overall business activity remain solid, giving many businesses a foundation to keep moving forward even as the environment shifts," said Evans.
"A rate rise isn’t a backward step, it’s a signal to reassess," he continued. "And that’s where brokers play a key role. Businesses that frequently review their lending and cashflow with a trusted finance professional tend to spot challenges earlier and often uncover opportunities they could have missed. An active check‑in can help owners stay confident, prepared and in control.
"When conditions tighten, or banks pull back, clarity matters. Whether it’s smoothing cashflow, managing rising expenses or supporting growth plans, brokers can help clients understand their options before pressure turns into pain – and help them stay ready to accelerate when momentum changes again.
:Now’s a good moment to reach out, start the conversation, and make sure clients have the insights they need to navigate the months ahead."
