Australia’s mortgage market is bracing for further turbulence as the Reserve Bank of Australia (RBA) continues its tightening cycle. The cash rate has already climbed to 4.1% this year, with the March decision narrowly split five to four among board members.
Herron Todd White’s April Month in Review noted: “Inflation has proven stickier than anticipated and the risk of it remaining above target is real.”
The release of Q1 CPI data showed headline inflation at 4.6%, the highest since 2023, strengthening the case for another rate rise in May. The report suggested a likely increase of 0.25 percentage points to 4.35%.
With sales volumes at a five-year low, further rate hikes could drive a surge in refinancing as households seek relief from rising repayments. Herron Todd White warned of “a significant uplift in Australians looking to refinance their mortgage.”
For brokers, this signals a growing pipeline of refinancing opportunities as households seek relief from rising repayments. Demand remains strong in major centres, but constrained new housing supply – driven by elevated construction costs – may intensify affordability pressures.
At the same time, government initiatives are reshaping demand at the entry level. The Albanese government’s revamped First Home Guarantee, introduced in January, removed income caps and lifted property price thresholds. Herron Todd White observed the changes have “driven entry-level prices to new highs in many centres.”
While the scheme expands access for first-home buyers, questions remain about whether longer-term commitments under the housing accord can be delivered at the required pace.
The report also highlighted external shocks, noting: “The conflict in the Middle East remains a meaningful driver,” with fuel and fertiliser costs feeding into transport, logistics, and construction. Rising input costs are expected to prolong supply constraints, limiting new housing at a time of robust demand.
Herron Todd White’s Prestige Property Monitor shows uneven conditions across cities. Adelaide remains “Hot” at 80/100, supported by low stock and strong buyer pools, while Sydney and Melbourne softened to 45/100, reflecting cautious sentiment in the $5–10 million range. Brisbane and Perth held steady at 70, with demand focused on tightly held premium locations.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
