iscover How accountants can respond to higher interest rates
BusinessThe new spike in the cash rate has reinforced the need for accounting professionals to review their mortgage positions.
Last week, the Reserve Bank lifted the cash rate for the first time in over two years. In a statement issued following the decision, the RBA board explained that while inflation has “fallen substantially since its peak in 2022, it picked up materially in the second half of 2025”. Its view, it said, is that inflation is likely to remain above target for some time.
The impact – for any accounting professional with a mortgage – is to increase the required monthly repayments on their loans and to reduce disposable household income. Moreover, it may well add a layer of mortgage stress to accountants’ shoulders and further limit future borrowing capacity.
Speaking to Accountants Daily following the decision, Accounting Home Loans director of sales Cullen Haynes (pictured) said the fact that the cash rate now sits at 3.85 per cent (a 25-basis-point increase) signals a clear shift in the monetary cycle.
“With inflation running at 3.8 per cent, the RBA has made it clear that the inflation dragon needs to be addressed early, even if that creates short-term discomfort for borrowers,” he said.
“Importantly, this move did not come as a surprise to the banks. Over the past month, lenders have been quietly ratcheting up fixed rates from 4.89 per cent to the average fixed rate of 5.5 per cent+, effectively pricing this decision well before the official announcement.”
For accounting practitioners, Haynes said, this reinforces that reviewing one's own position with a trusted broking expert sooner rather than later is paramount.
The numbers matter, Haynes stressed.
“Every 25 basis (0.25 per cent) point increase, for existing mortgage holders, adds roughly $160 per month to repayments on a $1 million loan and for those looking to get into the market, reduces borrowing capacity by around $30,000. In isolation, that feels manageable. If the RBA decides further rate rises are needed, which the market is already predicting, particularly alongside rising household and business costs, it can materially change financial outcomes,” he said.
“In terms of fixed rates, the biggest error we see in rising-rate environments is clients trying to time the market or outsmart the banks. The better conversation is about suitability, not prediction. Practitioners should be speaking with their accountant or financial adviser to stress-test cash flow and ensure their personal and household expenses can absorb further increases, which may still lie ahead.”
For many, Haynes added, a split or hybrid loan structure can offer balance.
“Fixing a portion of debt provides certainty, while retaining a variable component preserves flexibility with the ability to utilise an offset account to further save on interest. Again, fixing shouldn't be about being right on rates. It is about protecting your position and sleeping well if rates rise again.”
“In this cycle, structure and preparation will matter far more than perfect timing. It's important for accounting professionals to remember they can access certain market advantages that can make entering the property market more attainable and realistic for the cohort.”
Jerome Doraisamy
Jerome Doraisamy is the managing editor of Momentum Media’s professional services suite, encompassing Lawyers Weekly, HR Leader, Accountants Daily, and Accounting Times. He has worked as a journalist and podcast host at Momentum Media since February 2018. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
