RBA Interest Rates: Central Bank’s New Decision Hits Mortgage Holders Hard
The RBA Interest Rates decision on December 9, 2025, has created a fresh wave of concern for mortgage holders across Australia. In its final monetary policy meeting of the year, the Reserve Bank of Australia (RBA) chose to keep interest rates steady at 3.6 percent, rather than cutting them as many homeowners had hoped.
This move comes amid persistent inflation pressures, stronger domestic demand, and a tight labour market.
The result is a difficult situation for mortgage holders and borrowers who were counting on rate relief before the end of the year. In this article, we break down what this new RBA decision means, why it happened, how it impacts everyday Australians, and what could lie ahead in 2026.
What Did the RBA Decide About Interest Rates?
On December 9, 2025, the RBA Interest Rates decision confirmed that the official cash rate remains unchanged at 3.6 percent. The choice to hold was unanimous among board members and widely expected by markets and economists. The meeting was the last interest rate decision for 2025.
This means no rate cuts before Christmas, and likely no change for at least the first months of 2026. The decision was driven largely by rising inflation and stronger economic conditions that have persisted in recent months.
Recent inflation data showed prices increasing beyond the RBA’s target band, and the board noted that risks to inflation had tilted upward. RBA Governor Michele Bullock said more time was needed to assess inflation persistence before any future moves.
Why did the RBA keep rates steady?
The central bank held rates at 3.6 percent because inflation has picked up and shown signs of broader pressure across the economy. The RBA wants inflation to be firmly in its target range of 2 to 3 percent before considering cuts.
Is this decision good for mortgage holders?
Unfortunately no. Mortgage holders were hoping for lower interest rates to reduce repayment costs. With rates on hold, monthly repayments will stay high, and affordability pressures continue.
When could rates change next?
The next RBA meeting is scheduled for February 2 to 3, 2026. Many experts predict continued rates at 3.6 percent at least into the middle of next year and possibly beyond.
Impact on Mortgage Holders Across Australia
The strongest impact of the RBA Interest rate decision is felt by Australians with variable-rate mortgages. These borrowers usually see their monthly repayments adjust quickly after changes in the official cash rate. With rates held, repayments stay high.
Experts warned that mortgage holders have little relief to look forward to, even with past cuts earlier in 2025. The RBA had cut rates three times in 2025, easing repayments earlier in the year, but the current hold wipes out hopes of additional cuts now. This means no Christmas rate relief for homeowners.
Banks adjust their lending rates based on the RBA’s cash rate, so many borrowers will continue paying high interest rates on their home loans. This can affect household budgets, reduce disposable income, and put pressure on families who are already dealing with cost-of-living increases.
Tweet Reactions From Social Media
“RBA holds interest rates steady at 3.6 percent despite rising inflation, and Aussie mortgage holders take the hit.” — @vantagemkts_au
This reaction shows how financial analysts and everyday observers see the RBA’s decision as unfavourable for home borrowers.
“No rate cut before Christmas from the RBA is harsh on mortgage holders.” — @RositaDaz48
The sentiment highlights public disappointment and financial strain facing many households.
“RBA decision sees markets shifting focus to 2026 hikes, not cuts.” — @10NewsAU
Media coverage suggests that markets are already factoring in possible interest rate increases next year, rather than relief.
Why Is This RBA Interest Rates Decision Happening?
Australia’s central bank sets interest rates to balance inflation, growth, and employment. Right now, inflation has risen recently and is seen above the comfortable range that the RBA targets. Strong domestic demand and low unemployment have contributed to this trend. The RBA must act carefully to stop inflation from rising further while not weakening economic growth too much.
The board’s decision reflects a careful, data-driven approach and suggests that policymakers are more nervous about inflation than worried about slowing the economy just yet. This approach means prioritising price stability even if it inhibits quicker relief for borrowers.
Expert Views: Economists and Markets Respond
Economists broadly predicted that the RBA would hold rates at 3.6 percent. Many forecasts pointed to a continuation of the current policy into 2026. Some economists also note the possibility that rates might rise if inflation pressures intensify.
Markets are now pricing in a higher probability of a rate hike in 2026 than further cuts, reflecting stronger-than-expected inflation data. This marks a shift from earlier expectations of ongoing rate cuts driven by slowing growth.
The Bigger Picture: Inflation and Cost of Living
Inflation in Australia has been rising, with recent readings showing it at around 3.8 percent year-on-year. This is above the Reserve Bank’s preferred target range, which is meant to be between 2 and 3 percent. Higher inflation means everyday goods and services cost more, and holding interest rates helps slow down spending and price rises.
However, this strategy also means Australians face higher costs for borrowing, and lower wage growth in real terms adds to household financial pressure. For mortgage holders, this means ongoing stress rather than financial relief.
What This Means for 2026 and Beyond
Looking ahead, experts say that RBA Interest Rates will likely stay steady into 2026. Some predictions even lean toward a possible increase later in the year, depending on inflation and how quickly the economy evolves.
Many economists now believe that rate cuts are unlikely before the middle of next year, and may be replaced by potential rate rises if inflation proves persistent. That represents a hard reality for home buyers and investors, who may see higher borrowing costs and tighter affordability.
This cautious outlook reinforces why many homeowners and market watchers are bracing for a tough year ahead. Even small rises in interest rates can significantly affect mortgage repayments for Australians on variable loans.
Conclusion
The RBA Interest Rates decision to maintain the cash rate at 3.6 percent for Australia’s final 2025 policy meeting has major implications for mortgage holders. With no further rate cuts before Christmas and uncertain relief in 2026, many homeowners face ongoing financial strain.
The central bank’s priority remains inflation control and balancing economic growth.
For everyday borrowers, this means patience and preparation for sustained interest payments without immediate cost relief. As inflation risks persist, the decisions the RBA makes in early 2026 will be critical for Australian households and the broader economy.
The RBA’s approach shows that monetary policy is a delicate balance, with inflation, economic data and consumer behaviour all influencing future moves. Mortgage holders will be watching closely when the next official decision comes in February 2026.
FAQ’S
The RBA held the cash rate steady because inflation has risen again and remains above the 2–3% target range. The central bank wants to ensure inflation doesn’t accelerate before considering further cuts.
Not immediately. With rates remaining at 3.6%, mortgage repayments stay high. Economists say relief is unlikely before mid-2026, and some even warn the next move could be a hike if inflation keeps rising.
The next RBA monetary policy meeting is scheduled for February 2–3, 2026, where the board will review updated inflation and economic data.
Yes. Financial markets are now pricing in an increased chance of a rate hike in 2026 because inflation is proving more persistent than expected.
The hold means:
-High home-loan repayments continue
-Cost-of-living pressure stays elevated
-Borrowing remains expensive
Household budgets face ongoing stress, especially for variable-rate mortgage holders
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
