Rate Hikes Aren't Done Yet — What Self-Employed Borrowers Need to Plan For

Australia's rates cycle may not be over. AMP chief economist Shane Oliver warned on 4 June 2026 that the country's housing super cycle is under mounting pressure from interest rates, tax changes, and declining affordability — and that further rate increases remain a live possibility.

The warning comes as the RBA reported consumer price inflation still running at 4.2% annually as of April 2026, above its 2–3% target band, keeping the door open to additional monetary policy tightening.

Why "Rates Are Done" May Be Wrong

Many borrowers entered 2026 expecting rate cuts. The economic reality has proved more complicated:

• Sticky services inflation — non-tradeable prices (rent, insurance, utilities) remain elevated
• Wage growth — while supporting households, wage increases add to inflationary pressure
• AUD weakness — a lower dollar pushes up the cost of imports
• Fiscal stimulus — government spending on housing and infrastructure is adding demand

Shane Oliver's analysis suggests that until these forces abate, the RBA may be forced to hold or even raise rates further, even as the broader economy slows — a scenario economists call "stagflation light."

The Specific Risk for Self-Employed Borrowers

For self-employed Australians, rate uncertainty creates compounding challenges:

Income variability: Business revenues fluctuate more than wages. A higher-for-longer rate environment extends the period during which cash flow is squeezed.

Borrowing capacity erosion: Each 0.25% rate increase reduces the maximum loan amount a borrower qualifies for. For a $1.2 million loan, an additional 0.5% rate rise can reduce capacity by approximately $50,000–$80,000 depending on the lender's serviceability model.

Bank risk aversion: When rates are uncertain and the economy slows, banks become more conservative about Alt Doc and self-employed applications — precisely when these borrowers most need access to credit.

Strategic Options for Self-Employed Borrowers in 2026

What Non-Bank Lenders Offer in This Environment

Unlike major banks that rely almost entirely on tax return income, non-bank lenders such as MPFG Capital assess self-employed borrowers using a broader range of documentation:

• BAS statements (last 12–24 months)
• Accountant letters confirming income
• Bank statement analysis
• Asset and liability assessment

This approach means that even if your taxable income appears modest due to legitimate business deductions, your actual borrowing capacity may be significantly higher through a non-bank channel.

MPFG's View

The message from economists like Shane Oliver is clear: don't assume the rate cycle is over. For self-employed Australians who need to act — whether refinancing, purchasing, or restructuring debt — waiting for an imagined rate cut could cost more than acting with a well-structured loan now.

This article is for general information purposes only and does not constitute financial advice. Loan outcomes depend on individual circumstances. MPFG Capital holds Australian Credit Licence 553698.