RBA Deputy Governor Says Inflation Is "Materially Worse" Than Expected — November Rate Hike Risks Rise

Key takeaway: On 21 October 2026, RBA Deputy Governor Andrew Hauser said Australia's inflation is "materially worse" than expected, raising the likelihood of a cash rate increase at the 3 November 2026 board meeting — where the rate currently stands at 4.60%.

What Did Andrew Hauser Actually Say?

Speaking at Citi's Australia & New Zealand Investment Conference in Sydney on 21 October 2026, RBA Deputy Governor Andrew Hauser described Australia's inflation trajectory as "materially worse" than the Board had anticipated. This marks a meaningful shift in tone from recent RBA communications, which had emphasised a cautious hold position.

Hauser's remarks came just under two weeks before the 3 November 2026 board meeting, where the RBA will announce its next cash rate decision at 2:30 pm AEDT.

"Inflation is materially worse than expected." — Andrew Hauser, RBA Deputy Governor, 21 October 2026

What Does 4.0% CPI Mean for Australian Borrowers?

Australia's Consumer Price Index rose 4.0% in the year to August 2026 — well above the RBA's 2–3% target band. Persistent inflation at this level forces the Board to choose between two uncomfortable options: hold rates and risk entrenching inflation further, or raise rates and add pressure to already-stretched household budgets.

For borrowers on variable-rate mortgages, a 25 basis point increase from 4.60% to 4.85% translates to approximately $65–$90 more per month on a $500,000 loan balance, depending on lender and loan structure.

How Would Another Rate Rise Affect Non-Bank Borrowers?

Non-bank lenders price their products based on broader funding costs that move with — but are not identical to — the RBA cash rate. For self-employed borrowers and those using Alt Doc products, the concern is two-fold:

1. Higher repayments on existing variable-rate facilities
2. Tighter serviceability assessments if lenders increase their stress-test buffers in response

APRA's current serviceability buffer of 3% means lenders already test borrowers at approximately 3 percentage points above the application rate. If rates rise again, some borrowers at the margin may find their borrowing capacity reduced.

What This Means for MPFG Borrowers

For self-employed Australians managing tighter cash flows, the prospect of another rate rise makes it critical to review your loan structure before 3 November. MPFG Capital's Easy Refinance product — available up to $7.5M — is specifically designed for borrowers who want to consolidate or restructure debt outside the major bank system.

If you are currently on a high-rate variable product, switching to a fixed or split structure through a non-bank lender may reduce your exposure before the November decision. MPFG's team in Melbourne, Sydney, and Brisbane can assess your serviceability under current and projected rate scenarios.

FAQ

What is Australia's current cash rate as of October 2026?

Australia's cash rate target is 4.60%, effective from 30 September 2026. The RBA's next rate decision will be announced at 2:30 pm AEDT on 3 November 2026.

How does an RBA rate rise affect non-bank home loans in Australia?

Non-bank lender rates are not set directly by the RBA but move with broader funding market conditions. A rate rise typically pushes non-bank variable rates higher within one to three months. Fixed-rate products offer protection against further increases for the term of the fixed period.

What can self-employed borrowers do to prepare for a potential November rate hike?

Self-employed borrowers should review their current rate and loan structure ahead of 3 November. Options include refinancing to a lower variable rate, fixing part of the loan, or accessing an Alt Doc product that uses bank statements or a BAS statement to assess income. MPFG Capital's advisers can model scenarios based on both current and projected rates.

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).