The maximum amount people can borrow from the bank is set to take yet another haircut if the RBA hikes the cash rate for the fourth time in 2026.
Canstar analysis shows someone earning the average full-time wage of $108,650 will be able to borrow an estimated $11,200 less if an RBA rate rise materialises at the next meeting.
This is based on a person taking out an owner-occupier loan with no other debts, no dependents and minimal expenses. Note: Borrowing capacity figures are estimates and can vary from lender-to-lender.
This would take the total drop in borrowing capacity to 9% from the start to the end of the year.
Estimated change in borrowing capacity if the RBA hikes in September | ||
|---|---|---|
Borrower | Hike in Sept | Total drop since start of 2026 |
Individual (av. wage) | -$11,200 | -$47,400 (-9%) |
Couple (2 x av. wage) | -$22,400 | -$94,700 (-9%) |
Source: Canstar. Based on an owner-occupier taking out a 30-year loan at the av. rate. Assumes minimal expenses, no debts, no dependents, av wage based on ABS data. Full notes below.
Is a fifth hike possible?
While CBA, Westpac and NAB all believe there will be just one more hike on Tuesday, ANZ expects the RBA will hike for a fifth time in November, taking the cash rate to 4.85%.
Big banks’ cash rate forecasts for 2026 | ||
|---|---|---|
Forecast | Cash rate at end of 2026 | |
CBA | +0.25 Sept | 4.60% |
Westpac | +0.25 Sept | 4.60% |
NAB | +0.25 Sept | 4.60% |
ANZ | +0.25 Sept, + 0.25 Nov | 4.85% |
Should this happen, that same individual earning the average wage would see their borrowing capacity shrink by a further $10,700 taking the total drop to $58,100 since the start of the year, or 11%.
Estimated change in borrowing capacity in 2026 if there are 5 hikes | |
|---|---|
Borrower | Total drop in 2026 after 5 hikes |
Individual (av. wage) | -$58,100 (-11%) |
Couple (2 x av. wage) | -$116,200 (-11%) |
Source: Canstar. Based on an owner-occupier taking out a 30-year loan at the av rate. Assumes minimal expenses, no debts, no dependents, av wage based on ABS data. Full notes below.
Rate hikes to hit borrowing power, but will prices fall further?
Westpac released its updated property price forecast, with the bank now expecting prices in Sydney to fall by a total of 10% in the year.
Should this materialise, it would mean continued falls across every capital city from here through to Christmas, with Sydney falling by the most.
This could mean that a buyer in Sydney, might actually see property prices fall by more than their borrowing capacity, although this will depend on the market they’re buying in and whether we get more than one hike before the end of the year.
However, in other capital cities this is less likely.
Westpac property price forecast | |||
|---|---|---|---|
To date: 2026 (Cotality) | Change in 2026 | Change in 2027 | |
Syd | -6.7% | -10% | +2% |
Melb | -6.3% | -8% | +5% |
Brisbane | +2.8% | +2% | +3% |
Adelaide | +3.1% | +3% | +4% |
Perth | +4.1% | +3% | +5% |
Hobart | +4.2% | +4% | +3% |
Source: Westpac, Cotality Home Value index, 31 August 2026.
Borrowing reductions are far from a rounding error
Canstar’s Data Insights Director, Sally Tindall, says, “Another rate hike on Tuesday would mean yet another haircut to the maximum amount someone can borrow from the bank.”
“For a person on the average wage, that’s a drop of $11,200 to their maximum home buying budget. This might not sound like much in the context of buying a property, but they’re already had three trims to their budget this year. A fourth hike would tally up to a pretty hefty cut of $47,400.
“If rates go up five times this year, as ANZ is forecasting, an average-wage borrower could see more than $58,000 wiped from their borrowing capacity. That’s not a rounding error – it could be the difference between being able to bid on a property and having to sit on the sidelines.
“The interesting twist is that while higher rates are shrinking borrowing capacity, property prices, in some cases, could fall further.
“If Westpac’s forecast comes to pass and prices in Sydney drop by a total of 10 per cent this year, then for some borrowers, they might find the cut to their home buying budget is less than the drop in prices in their area.
“But, as is always the case, it will depend on the local market. While Westpac is essentially expecting property prices to drop in every capital city from now through to the end of the year, there’s a big difference between say Sydney, which has been on the slide for most of 2026, and Perth and Brisbane, which are only just starting to slide.
“For prospective buyers, understand that at least one further rate hike is coming, but potentially more and factor this into your budget.
“Yes, the bank stress tests your finances at the back end when you go to apply for a mortgage, but it's worth running the numbers yourself to understand what they look like.
“While there’s no suggestion rates will rise by a further 3 percentage points in the near future, that’s what the banks will be stress testing your budget at because over a 30 year term, anything is possible.”
Borrowing power notes: Based on someone taking out a 30-year owner-occupier loan at the average new customer variable rate (RBA). Assumes $24k p.a. of expenses for one individual and $48k p.a. of expenses for a couple with no debts and no dependents. Income is based on the ABS weekly ordinary time full-time earnings in original terms. Does not factor in wages growth. Borrowing power based on 90% of post-tax income available to service the loan and expenses, and a 3.00% interest rate buffer. Tax calculations based on the current financial year, excluding Medicare Levy. Borrowers should seek personal financial advice before deciding how much to borrow and know the actual amount will vary depending on their personal circumstances and between lenders.
