Rates on hold in December? What the RBA's forecasts mean for the next six months

The short answer: a pause in December looks likely, but rates are expected to stay high well into 2027. This article sets out what the RBA's forecasts say, how confidence is holding up and what business and investment borrowers should plan for.

What the RBA said

The November decision was split. Six members voted for the rise and three voted to hold at 4.60%. The board didn't say another rise was likely, and when Governor Michele Bullock was asked whether the RBA was now on hold, she said she didn't know what the next move would be. See Rates hit 4.85%.

The RBA's updated forecasts are more telling. Inflation is now expected to stay elevated through much of 2027 and not to reach the top of the 2–3% target range until late 2027.

The forecasts are based on market pricing that assumed the cash rate would rise about another 0.35% by mid-2027, then settle at about 4.8% in 2028. That's an assumption, not a commitment. But it shows the RBA isn't expecting rate cuts any time soon.

Confidence has fallen sharply

Households are feeling the strain. The Westpac–Melbourne Institute Consumer Sentiment Index fell 2.7% to 78.2 in November, the lowest since late 2022. Among people with a mortgage, sentiment fell 11.6% to 68.1, a record low on measures going back to 1994. After the RBA decision, 72% of consumers surveyed expected mortgage rates to rise further over the next year.

Source: Westpac–Melbourne Institute Consumer Sentiment, November 2026.

Consumers' house price expectations were also sharply downgraded. Lending has slowed too. RBA figures show new home loan commitments have fallen 27% from their peak in November 2025, with the largest fall in investor loans on record.

What economists expect next

Westpac expects the RBA to pause at its 7–8 December meeting to assess the combined effect of this year's rises. It sees February as the next meeting where another rise is likely to be actively considered, but doesn't expect one in its central forecast.

Two data releases will matter most before then: the September quarter lending figures on 11 November and the October monthly CPI on 25 November. For the latest inflation picture, see Inflation hits 4.3%.

What it means for business and investment borrowers

1. Plan for "higher for longer", not quick relief

Even if rates pause, the RBA's forecasts don't point to cuts before late 2027. Refinance plans and exit strategies that assume cheaper money in 2027 need a backup plan.

2. Refinancing will stay tight

Banks assess serviceability at current rates plus a buffer. With rates at an 18-year high, some borrowers who planned to refinance to a bank may not qualify yet. Allow more time, or consider bridging the gap. See Bridging finance explained.

3. Values may keep falling

Falling confidence and weaker house price expectations suggest the downturn has further to run. Base loan plans on current valuations.

4. Watch the holiday slowdown

Valuers, solicitors and lenders slow down over Christmas and January. If a settlement, refinance or loan expiry falls between mid-December and late January, start now.

5. Keep a buffer for February

Another rise isn't the central forecast, but it can't be ruled out. Make sure your cash flow could absorb a further 0.25% if needed.

The Funding Door view

A December pause would be welcome, but it wouldn't mean the pressure is over. The RBA's message is that rates are likely to stay high for some time. Borrowers who plan their refinances, exits and holiday-period settlements now will be better placed than those waiting for relief that may be some way off.