by Paul Flakus, Flakus & Associates

Many thanks for your support in 2025 and enabling me to provide my professional services to you for the past 29 years. I am now entering my 30th year of providing financial solutions for clients under Flakus and Associates.

Recently in its March 2026 meeting, the Reserve Bank of Australia (RBA) increased the official cash rate by 0.25%. This has lifted the official cash rate to 4.10%.

By now, all the financial institutions would have increased their home lending rates and commercial lending rates by 0.25% and this could lead to reduced borrowing capacity for the majority of home loan applicants. Once the lenders adjust their Household Monthly Expenses (HEMs) , borrowing capacity may be reduced even further.

Apart from increasing lending rates, banks would have also increased their savings deposit rates. However, some may not increase this by the full 0.25%. It is recommended that you check out the various websites for their deposit rates which are also tiered.

The financial regulator APRA still has the 3% interest rate buffer on assessment of home loans. With the recent increase in home loan interest rates, the 3% buffer now pushes the lenders “Assessment Rates” a little further up the scale for potential borrowers. This will restrict their potential borrowing capacity.

Last year, we noticed that the major banks were placing more emphasis on their proprietary channels to increase their lending volumes. This is via an increase in their mobile lenders, internal home loan lenders and introducers.

Recently, it was reported that Finance/Mortgage Brokers are approaching the milestone of 80% of all home loans submitted to lending institutions. This proves that the broker is still acting in the best interests of the client to find a home loan that is suitable for their requirements, and not driven by the lenders’ sales volume targets and requirements to retain their accreditation.

Some banks have an introducer program/pipeline to push more mortgages to them. An introducer is not a broker. Introducers refer the customer to the lender and get renumeration if the loan is settled. They do not provide any credit advice, nor arrange finance. They have no statutory duties that a finance/mortgage broker bears. The introducer does not comply with the National Consumer Credit Code Protection (NCCP) and only relies on a licensing exemption.

As a Footnote, I noticed recently that lenders have been increasing their Fixed Home Loan rates in early December 2025. Usually, this is an indication that the banks believe that the Reserve Bank may be announcing a Cash Rate movement. This practice is not usually distributed for general publication.

 

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