As we close out the first quarter of 2026, the Australian property and finance landscape has proven to be as dynamic as ever. We are currently seeing a unique “tug-of-war” between sticky inflation, shifting lending policies, and persistent housing demand.
Whether you are a first home buyer, a seasoned property investor, or simply looking to refinance, staying ahead of these macro trends is critical to protecting your wealth. Here is our exclusive wrap-up of the Q1 market and what you need to prepare for as we approach the end of the financial year (EOFY).
1. The RBA, Interest Rates, and Your Borrowing Capacity
The Reserve Bank of Australia (RBA) took a hawkish stance this quarter, with consecutive 25 basis point hikes in February and March bringing the official cash rate to 4.10%.
- The Impact on You: If you haven’t reviewed your borrowing capacity since Christmas, it has likely decreased. Lenders assess your ability to repay a loan at a rate higher than the actual interest rate (the serviceability buffer). These recent hikes mean you may need to reassess your target purchase price or look toward non-bank lenders who are offering more flexible buffer policies (e.g., a 1.5% buffer for eligible refinancers).
2. Global Events Hitting the Local Hip Pocket
Geopolitical tensions, particularly the recent US-Iran conflicts, have caused global oil prices to spike. You’ve likely felt this at the petrol pump, but it also impacts your mortgage application.
- The “HEM” Factor: Banks use the Household Expenditure Measure (HEM) to estimate your basic living costs. Because energy and transport costs have surged, lenders have quietly increased these HEM benchmarks. This means banks are assuming your living expenses are higher, which can further tighten the amount they are willing to lend you.
3. Government Grants & New Compliance Rules
- Tranche 2 AML/CTF: New Anti-Money Laundering laws have now fully rolled out across the financial sector. If we ask you for a bit more paperwork regarding your “Source of Funds”—especially for large deposits or family gifts—this is why! It’s a standard compliance measure across all Australian lenders now.
- First Home Buyers: It’s not all tightening policies. The government has adjusted the price caps for the First Home Guarantee (FHBG), meaning more buyers can enter the market with just a 5% deposit while avoiding the costly Lenders Mortgage Insurance (LMI).
4. Looking Ahead: What to Expect in Q2 2026
As we charge toward the EOFY, keep these three factors on your radar:
- The March Quarter CPI Data (Late April): This will dictate what the RBA does in May. A drop in inflation could mean a pause on rate hikes, boosting consumer confidence.
- The Pre-Election Lull: With a Federal Election looming and debates around Capital Gains Tax (CGT) and negative gearing back in the headlines, we expect some investors to rush their purchases to secure current tax benefits, while others may pause to “wait and see.”
- EOFY Bank Wars: June is traditionally the biggest month for lenders trying to hit their financial year targets. We anticipate aggressive cashback offers and heavy rate discounts for strong refinancing applications.
What This Means For Your Next Move (And How We Can Help)
In a market moving this quickly, the worst thing you can do is “set and forget” your mortgage. High interest rates mean that the “loyalty tax” for staying with your current lender is more expensive than ever.
As your trusted mortgage broker, we operate under a strict Best Interests Duty, meaning we are legally bound to put your financial wellbeing first—unlike the banks, who only sell their own products.
Here is what you should do right now:
- Got a Pre-Approval? If your pre-approval is more than 60 days old, it needs an urgent health check. Let’s recalculate your numbers against the new HEM benchmarks and interest rates before you bid at an auction.
- Paying over the odds? If your current rate doesn’t start with a ‘5’ or low ‘6’, you are likely paying too much. Let’s explore the best refinance home loan options in Australia to boost your monthly cash flow.
- Looking to Invest? With strong yields in markets like Brisbane and Perth, now is the time to unlock your home equity.
Ready to optimise your finances before EOFY? Don’t navigate this complex market alone. Contact our team today to use our advanced borrowing capacity calculator and map out a tailored lending strategy for 2026.