T’was the night before Christmas, and all through the nation, not a cash rate was stirring, in the war against inflation.
Australians have been robbed of rate relief ahead of the busy holiday spending season, as the Reserve Bank clamps down again to fight inflation.
A 0.25% rate cut would have reduced monthly repayments for someone with an average loan of $694,000 by around $103, according to analysis by Compare the Market
With the average Australia spending around $828 on presents, food and activities for the holiday season, every dollar saved counts.
But Compare the Market’s Economic Director David Koch said homeowners could no longer count on the RBA to deliver those savings.
“Indications now are that interest rates will likely be on hold for the foreseeable future, maybe even all of next year,” Mr Koch said.
“In the lead up to Christmas, the Reserve Bank will be watching some of those consumables as we buy and party over summer. If they start to trend up and add to momentum, the inflation rate could be a real worry, especially if the December quarter figure ends up higher than expected.
“And if inflation keeps accelerating like this month in, month out, the next move in interest rates could be up.”
Rising interest rates, mortgage and rent affordability were among some of the top concerns for Australians heading into 2026, according to a nationally representative survey by Compare the Market.*
Asked about their worst financial fear for the New Year, 12.3% said losing a job or source of income was their biggest worry, 11.3% worried about paying energy bills, while 10.9% said a cash rate hike would be the worst scenario.
A similar number (10.8%) feared being unable to pay their mortgage or rent, and 10.2% said they worried about putting money aside for the future.
More than half of Australians (57.6%) said that having higher interest rates for longer would negatively impact them in some way with 27.6% saying it would affect their ability to save.
Mr Koch urged homeowners to look for their own savings by shopping around for cheaper rates.
“Don’t for a second think that the banks are going to do you a favour and reduce your rate without you asking,” Mr Koch said.
“Be the squeaky wheel and if your bank won’t budge it’s time to consider a switcheroo.
“Right now, there are advertised variable rates as low as 5.24% for borrowers with a loan-to-value ratio <60%. That’s 0.27% less than the average variable rate according to the RBA – meaning you may be able to effectively create a rate cut of your own.
“Remaining on a competitive rate will be all the more important heading into next year, especially if a cash rate hike is on the cards.”
*Survey of 1,010 Australians in December 2025
