RBA Lifts Cash Rate to 18-Year High as Home Loan Commitments Fall 27%
Australia's central bank lifted the cash rate to an 18-year high, and new home loan commitments are already 27 percent below their November 2025 peak. Fresh lending, consumer confidence and business sentiment data are due, along with a speech from the RBA's chief economist.
Australia's Reserve Bank (RBA) lifted the cash rate to an 18-year high, and new home loan commitments have fallen 27 percent below their November 2025 peak, according to figures compiled by RBA staff. Lending and confidence numbers show how far the latest rise is feeding into households, with several releases due in the coming days.
The decision was the latest blow to households already struggling to service mortgages and cope with the rising cost of living. It also adds weight to a housing downturn on track to be the deepest on record.
What the lending data may show
The Australian Bureau of Statistics is expected to report that the fall in new home loan numbers sped up in the September quarter. The previous reading was a 5.4 percent drop in the three months ended June.
Economists at ANZ bank have tipped a 7 percent drop in overall lending. ANZ economist Madeline Dunk said housing prices and sales volumes both declined in the third quarter, which "will weigh on new housing lending".
She added that monthly credit data, which moves more slowly, "suggests a sharp pullback in investor demand". That is likely to show up more clearly in the lending release, she said.
Investors leave the market
Owner-occupier lending has edged lower, but owners' share of the loan market has risen as investors have deserted it in droves. RBA figures showed the largest fall in investor loans on record. Lending for newly built homes held up relatively well.
RBA governor Michele Bullock noted that investors tend to exaggerate housing cycles. She said the swing had been especially sharp this time because of the government's curbs to property investor tax breaks in the May budget.
Spending and sentiment
AMP chief economist Shane Oliver projects a 15 percent fall in home prices from peak to trough. He expects that to knock around 1.5 percent off consumer spending, as owners feel poorer. Economists call this the wealth effect.
So far, spending has held up. ABS data last week showed household spending up 6.8 percent over the year, or a robust 3.2 percent in volume terms once higher prices are stripped out.
Westpac's consumer confidence index remains in deeply pessimistic territory and is expected to stay there when it is updated. NAB's business sentiment survey is likely to show employers in a similarly dour mood.
Speeches and markets
Oil prices have turned lower following the Democrats' sweeping victory in the US midterms, and markets predict interest rates have peaked. Conditions may therefore be about to bottom out.
RBA chief economist Sarah Hunter addresses the UBS Australasia Conference in Sydney, with investors watching for any hint of where rates go next. Former banker Marnie Baker gives her first speech as an RBA board member to the Australian Retail Credit Association later in the week. A review of the central bank requires board members to give public speeches to improve transparency.
On Wall Street, fears that a Democratic-led Congress would bring tougher AI regulation appear to have faded. The S&P 500 rose 23 points, or 0.32 percent, to 7,376.86. The Nasdaq gained 264 points to 24,579.43, while the Dow Jones Industrial Average fell 0.46 percent to 51,285.73.
Australian share futures climbed 29 points, or 0.32 percent, to 22,711. The S&P/ASX200 fell 44.3 points, or 0.49 percent, to 9020.8 on Friday. The broader All Ordinaries lost 60.5 points, or 0.66 percent, to 9144.7.
