Rates Are Up Again. What's The Move For Investors?

By Steve Carroll, Managing Director, CQB Partners

I watched the decision come through at 2:30, like a lot of you probably did. Twenty-five basis points, cash rate to 4.60%. Fourth rise this year, a full percentage point since January, and the highest the cash rate has been since late 2011.

Nobody was surprised. The Board had pretty much told us in August that it would move if inflation didn't behave, and it didn't.

By the evening the headlines had settled on "prices will fall further", They probably will.

But I don't think that's the most useful thing to take out of this if you're actually trying to buy something. What I keep coming back to is what this rise does to the other people at the open home, and to the person selling.

The first message I got after the announcement was from a client who's been looking for a few weeks with us. It was one line: "Should we just wait now?" I've had some version of that question from almost everyone we're working with since.

It's a fair thing to ask. My answer is that waiting is a decision like any other... However.

What it does to prices

Direction isn't really in question. National values were down 3.1% over the three months to August, and Cotality's research director has made the point that each rise pushes the falls further down the price ladder.

What drives that is borrowing capacity, and capacity is falling faster than prices are.

Cotality reckons buyers can borrow around $90,000 less than they could in February. The monthly repayment on an average mortgage is up more than $450 since the start of the year.

I ran this one move through a basic model. These are illustrative numbers, and they assume the banks pass the full 25 points on. (which they have)

On an $800,000 loan over 30 years, going from 6.90% to 7.15% adds about $134 a month. Call it $1,600 a year. Annoying, but most people will absorb it.

What it does to the open home

This is the part I think gets missed.

The weekend before the decision, Cotality's preliminary national clearance rate was 50.3% on 1,428 auctions. That's a ten week low. Same time last year it was sitting above 70%. So roughly half the homes going under the hammer right now aren't selling on the day.

I tend to read a clearance rate as a rough count of bidders. At 70% a decent house gets three, four, five registered buyers and they push each other past reserve. At 50% plenty of homes get one bidder, or none, and pass in.

This rise will thin those rooms out further, because every pre-approval written at the old rate now gets reassessed at the new one. Some of those buyers come back with a smaller number. Some just stop looking for a while.

How we leverage this opportunity

Twelve months ago you basically had to go unconditional to be taken seriously. Now a vendor looking at a thin room will often take a subject to finance offer from a buyer who can show they're genuine. In a falling market, where a valuation can come in short, that clause is worth a lot more than people think.

Settlement is another one. A longer or shorter settlement can cost the vendor a lot and you very little, so it's worth finding out which one they need. Same with pre-auction offers. When clearance rates are sitting around half, agents want certainty, and a clean offer before auction day gets listened to in a way it wouldn't have a year ago.

Price comes after all of that. The buyer who turns up with a proper valuation, a comparable sales case and finance already restated at 4.60% is the one the agent takes seriously when the vendor finally asks what they can actually get.

Where I'd be careful

I'm not going to pretend a falling market suits everyone. A few things I'd want anyone to think about.

It might not be done. If October's CPI comes in hot, November probably brings a fifth rise, another trim to capacity and likely another leg down. Buying at a discount still means buying into a market that can go lower.

What protects you is the gap between what you pay and what the place is worth, not a guess about where the bottom is.

Your own numbers moved yesterday too. If you've got a pre-approval, it was written at the old rate. Get it restated before you bid. Finding out on auction day is a bad way to learn about a $20,000 gap.

And a cheap price on the wrong property is still the wrong property. Soft markets tempt people into places they'd never have looked at a year ago just because the number looks lower.

The asset has to stand up on its own.

For investors that means a net yield you can defend after holding costs at today's rate.

Where that leaves you if you're investing

Rate rises make buying harder for everyone. That's what they're designed to do. But if you've done the work, you know what you can really borrow at 4.60%, you've done your homework on the property and you're ready to move, you're now up against fewer people than at any point in the last few years... this is where we leverage.

You don't need rates to come down to do well in this market. You need to negotiate properly while the room is quiet.

Run your numbers at the new rate

If yesterday's decision has you second guessing a purchase, the useful question isn't whether prices fall further. It's what you can actually borrow at 4.60%, what that specific property is worth against recent comparable sales, and whether it still stacks up once every real holding cost is in.

That's what we do at CQB Partners. Independent, flat fee, analysis first. No commissions, no developer stock, no push to transact. Book a discovery call and we'll stress test your next purchase at today's rate, or tell you straight if now isn't your time.

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CQB Partners is a licensed buyer's agency, not a financial adviser or credit adviser. This is general information, not personal financial, credit or investment advice, and does not account for your circumstances. Repayment and borrowing capacity examples are illustrative only: they assume a 30-year principal and interest loan, an average variable rate of 6.90% moving to 7.15% with the full increase passed on, and a 3 percentage point serviceability buffer. Individual lender rates and assessment criteria vary. Figures are current as at 30 September 2026 and drawn from the RBA Monetary Policy Board statement of 29 September 2026, Cotality (weekly auction results to 27 September 2026, borrowing capacity estimates, Home Value Index and rental yields), and ABS CPI data. Forecasts are forecasts. Confirm your own position with your broker before acting.