Compare the Market’s Economic Director David Koch has reacted to the latest CPI data for the December quarter, signalling that a rate hike could be on the horizon for mortgage holders.
“It’s a bit of a shock because it’s at the higher end of what the markets were predicting,” Mr Koch said. “It’s not just the number, it’s the trend. It’s the momentum and the direction where things are moving and it puts pressure on the Reserve Bank to think really seriously about putting rates up.
“Six months ago, employment and the jobs market were starting to soften and we thought, ‘great, rate cuts could be on the way’. That didn’t last long and now wages are putting pressure on CPI again.
“The Reserve Bank has always said that the latest data would inform their decisions. They’ve said that time and time again. History shows they will want to get in front of the issue but we’ve still got uncertainty overseas, and a rate hike would impact on our currency which in turn impacts exports. This will give them a lot to think about.”
Any increase in interest rates would have a direct and immediate impact on household budgets, particularly for borrowers with larger mortgages.
“A single 0.25% rate rise could push monthly repayments up by about $94 for someone with a $600,000 mortgage. That’s an extra $1,128 a year — money many households simply don’t have to spare when they’re also being hit with higher grocery costs, insurance premiums and energy bills,” Mr Koch said.
| Loan size | Monthly impact of a 0.25% rate increase | Monthly impact of x2 0.25% rate increases (0.50%) | Monthly impact of x3 0.25% rate increases (0.75%) | Monthly impact of x4 0.25% rate increases (1%) |
| $500,000 | $79 | $158 | $239 | $320 |
| $600,000 | $94 | $190 | $287 | $384 |
| $750,000 | $118 | $237 | $358 | $480 |
| $900,000 | $142 | $285 | $430 | $577 |
| $1,000,000 | $157 | $317 | $478 | $641 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 5.43% that is increased by 0.25% a month. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. | ||||
New data from Compare the Market shows that a quarter of Aussies (25.17%) surveyed in January listed mortgage or rental costs as their biggest budget pressure over the past 12 months.*
And, amid rates being left on hold or potentially rising in 2026, the research found homeowners would try ease financial pressure by:
• making extra repayments: 14.15%
• switching and refinancing to a more competitive variable-rate home loan: 12.19%
• doing nothing and staying with their current home loan lender: 11.99%
• opening an offset account: 10.52%.
*Compare the Market survey of 1,017 Australian adults, conducted January 2026.
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Phillip Portman | 0437 384 471 | [email protected]
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