Will the New Year Bring Lower Interest Rates? December Rate Report

2026 is knocking on our doorstep! As we wrap up 2025, a year that finally saw interest rates start to fall, and mortgage holders finally start to see relief ^[1] it’s easy to see 2025 as a big picture win for owners and buyers. When put under a microscope, 2025 was a bit of a mixed bag.

Yes, interest rates came down, but many of us were optimistic they would fall this year and likely expected more cash rate cuts than the RBA chose to deliver. In addition, the cost of living stayed high, and just in time for the Holiday season, inflation started to creep back into the danger zone.

Still, we’re optimists at heart, and many of us are still hopeful that the RBA has one last Christmas miracle to gift us before we bid farewell to 2025 and ring in the new year. So…did we get a cash rate cut?

Our Spirits may be high heading into the holidays, but unfortunately, the cash rate won’t be getting any lower in 2025. The cash rate has been put on hold and will finish the year at 3.60%^[2].

How this Affects Home Owners

Home owners with a variable rate mortgage interest rate will see their interest stay put, which means unfortunately, repayments aren’t on their way down for the foreseeable future. There’s also a decent chance that interest rates are at their lowest point in this rate cycle. It may be worth reaching out to your local MoneyQuest broker to discuss whether a fixed or variable rate is right for your needs.

How this Affects Home Buyers

If you were waiting for another rate cut to increase your borrowing power, you’ll still be waiting quite some time. What’s more, if you have tunnel vision on rate cuts, you could see property prices rise and competition increase, making the benefits of a rate cut moot.

The right time to buy is determined by several factors, not just interest rates. In fact, the most important factors are typically your personal factors, such as deposits, grants, schemes and research. There’s never a perfect time to buy, but if you’re waiting for one factor to line up, you may. miss out on the right time to buy. Reach out to your local MoneyQuest broker and see if the right time is now.

What’s Next?

The RBA doesn’t meet in January, so the next monetary policy decision will occur on February 2nd, 2026. Fingers crossed, we’ll see more interest rate cuts next year, but we’ve likely seen most, if not all, cuts for this cycle.

With the Consumer Price Index rising over the last couple of months, we could be looking at a cash rate hike as soon as February^[3]. While even 2 months ago, a rate hike would be unheard of. A sharp swing of inflation upward has us cautious that the cash rate cut party is over.

Getting in touch with your local MoneyQuest broker to help ensure you’re not paying too much in interest in the long run is paramount. Reach out to us today.

[1] Mortgage Stress Falls to Two-Year Low. BrokerDaily. 27/1/25. Viewed 9/12/25.

[2] Monetary Policy Decision, December 2025. RBA. 9/12/25. Viewed 9/12/25

[3]  Hutchens, G. New monthly inflation data shows jump from 3.6pc in September to 3.8pc in October.  ABC

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