Inflation Update Australia | What It Means for Borrowers | QLoans.au

Australia’s inflation has eased more than expected, dropping to 3.4%, offering some short-term relief for mortgage holders. However, with core inflation still above the RBA’s target band, a February rate hike remains firmly on the table.

What’s happening

• Trimmed mean inflation eased slightly to 3.2%, the RBA’s key measure.
• The RBA meets on 3 February, with quarterly inflation data due 28 January.
• A result above 3.2% increases the likelihood of a rate rise; at or below may support a hold.
• A 0.25% hike would add around $90/month on a $600k loan, or $150/month on a $1m loan.

What this means for homeowners

• Rate cuts remain unlikely in the near term.
• The interest rate outlook for 2026 is uncertain and data-dependent.
• Households should plan for rates staying higher for longer.

Top Tips

• Get ahead of risk, not headlines
  Don’t wait for an RBA announcement. Stress-test your loan now to ensure repayments remain comfortable if rates rise again.
• Review your rate, even if you’re “fine”
  Many borrowers are paying loyalty tax. A pricing review or refinance could soften the impact of any future hike.
• Structure matters as much as the rate
  Offsets, redraw, and split loans can materially improve cash flow and flexibility in a volatile rate environment.