RBA Deputy Governor Warns Rates May Need to Rise — What Australia's 3.5% Inflation Means for Borrowers Before 29 September

Key takeaway: The RBA's cash rate sits at 4.35% but Deputy Governor Andrew Hauser has publicly flagged inflation as "one big problem," raising the realistic possibility of another rate hike at the 29 September 2026 board meeting — borrowers should review their loan position now.

Why Is the RBA Signalling Rates Could Still Go Higher?

Australia's central bank has held its cash rate at 4.35% since August 2026, but that stability may be short-lived. In an interview on ABC's 7.30 programme on 8 September 2026, RBA Deputy Governor Andrew Hauser described inflation as "one big problem" still facing the Australian economy — language that markets interpreted as a warning that the September 29 board meeting could bring further tightening.

The ABS confirmed annual consumer price index growth of 3.5% for July 2026, still above the RBA's target band of 2–3%. While headline inflation has eased from its 2022–23 peaks, services inflation — covering essentials like rent, insurance, and healthcare — has proven sticky. The RBA's own August 2026 Statement on Monetary Policy acknowledged that returning inflation to target "may require further adjustment to the cash rate."

"Inflation is still a problem." — Andrew Hauser, RBA Deputy Governor, ABC 7.30, 8 September 2026

What Does a Potential Rate Rise Mean for Home Loan Borrowers?

A further cash rate increase of even 25 basis points would push the target to around 4.60%, adding pressure to already-stretched household budgets. For a $700,000 variable-rate loan, each 0.25% increase typically adds approximately $120–$150 per month to repayments — material at a time when average weekly earnings sit at $2,083.70 (ABS, May 2026) and GDP growth has slowed to just 0.4% in the June quarter.

For borrowers on variable rates — whether with a major bank or a non-bank lender — this is the moment to review your loan structure. Those approaching the end of a fixed-rate term face a particularly sharp decision: extend on a new fixed term, or roll to variable and absorb potential further rises.

How Non-Bank Borrowers Are Positioned Differently

Not all borrowers face the same exposure to rate movements. Non-bank lenders like MPFG Capital typically price their products off different funding benchmarks than the major banks, which means the pass-through of an RBA rate change is not always immediate or uniform.

For self-employed borrowers on Alt Doc loans — whose income may fluctuate more than PAYG earners — rate uncertainty compounds serviceability pressure. If your income has grown since your loan was first approved, this may also be an opportunity to revisit your borrowing capacity and potentially refinance into a product that better reflects your current financial position.

The RBA's next decision lands on 29 September 2026. That leaves a narrow window to act.

What This Means for MPFG Capital Clients

At MPFG Capital, we work with borrowers who don't fit the standard bank template — self-employed business owners, new migrants, and those who've been declined by the majors. In an environment where rate uncertainty is real, having flexibility in your loan structure matters more than ever.

If you're currently on a bank variable rate and concerned about future rises, MPFG's Easy Refi products may offer an alternative worth exploring — with loan amounts up to $7.5 million and options designed for self-employed borrowers who need to document income differently. Our brokers in Melbourne, Sydney, and Brisbane can assess your position quickly.

FAQ

Will the RBA raise rates on 29 September 2026?

The RBA has not pre-committed to any action, but Deputy Governor Andrew Hauser's 8 September warning about inflation being "one big problem" has sharpened market expectations of a possible increase. The decision will depend on new economic data released before the meeting. Borrowers should plan for both scenarios.

How do RBA cash rate changes affect non-bank home loans in Australia?

Non-bank lenders set rates independently of the RBA cash rate, though market funding costs generally track broader interest rate movements. This means rate changes may flow through differently — and sometimes more slowly — than with the major banks. Always check your specific loan terms and contact your lender directly for certainty.

Should I consider refinancing before the 29 September decision?

Refinancing typically takes two to four weeks for unconditional approval, longer if your situation is complex. Starting the conversation now gives you the most options. A non-bank lender with Alt Doc capability may be able to assess your application faster than a major bank in some circumstances.

This article is general information only and does not constitute financial or credit advice. All applications are subject to credit assessment by MPFG Capital (ACL 553698).