The Reserve Bank lifted the cash rate by 25 basis points to 4.85% this week, the highest level since December 2008 (RBA, November 2026). The Board was split, with six members voting to hike and three preferring to hold. That is the fifth increase this year, and 125 basis points of tightening in total. For business owners and CFOs who have been carrying floating-rate debt through all of it, the natural question is no longer just how high rates will go, but what to do now that the climb may be over. 

We think the answer is more nuanced than either “lock everything in” or “wait for cuts”. Below we walk through what the latest decision tells us, what is happening in property, and the practical funding decisions we are discussing with clients right now. 

A hike, but with a different tone 

The decision itself was widely anticipated. What matters more is the language that came with it. The Board dropped its earlier line about being prepared to lift the cash rate further if needed, and the Governor described the moment as a sensible point to take stock, noting that the most recent increases have not yet fully worked through the economy. In our experience, a central bank rarely removes a sentence like that by accident. It reads as a signal that the Board believes it has done enough, at least for now. 

That said, the Board has not gone soft on inflation. Forecasts for underlying (trimmed mean) inflation were revised up to 3.6% for the year to December 2026 and 2.9% for the year to December 2027, with a return to 2.4% not expected until the end of 2028 (RBA, November 2026). Higher fuel and commodity prices linked to the conflict in the Middle East are part of the story, and the Board remains concerned that elevated inflation expectations could become entrenched among households and firms. 

At the same time, the growth outlook has been marked down. Output growth is now forecast at 1.3% for the year to December 2027 and 1.5% for the year to December 2028, both below the roughly 2% the economy can sustain over time (RBA, November 2026). The unemployment rate is expected to drift up to around 5.1% by 2028. Put simply, the central bank is expecting a slower economy, a softer labour market and inflation that eases only gradually. 

For a business, that combination has a few clear implications. Rates are likely to stay high for longer than many would like, even if they stop rising. Cuts are unlikely to arrive quickly. And demand conditions, particularly for consumer-facing businesses, are expected to soften through 2027. 

The property correction is a bigger story than the headlines suggest 

National dwelling prices have now fallen 6.7% in the seven months since their March peak, which makes this the fastest eight-month downturn in 40 years and sharper than the 2022-23 correction. The monthly pace of decline has been easing since July, but the cumulative fall is already large. Our read of the data is that the eventual peak-to-trough decline is tracking closer to 10% than the 7.5% seen in earlier cycles, with a bottom more likely in the first quarter of 2027. 

The decline is uneven. Brisbane and Perth have seen the sharpest recent falls, down 6.1% and 5.7% respectively over the last three months, more than double the fall in Melbourne. 

For commercial borrowers, this matters in three ways. First, many business owners use residential or commercial property as security for their working capital and equipment facilities. If a valuation falls, loan-to-value ratios rise, and a facility that looked comfortable twelve months ago may now sit close to a lender’s limit. Second, lenders tend to tighten their credit appetite around property when prices are falling, which can affect both the amount they will lend and the pricing they offer. Third, softer property markets flow into confidence and spending, which feeds back into trading conditions for builders, tradies, agents, retailers and hospitality operators. 

If you have an upcoming refinance, a security swap or a facility review, it is worth getting a current view of your property values now, rather than discovering the gap at the point a lender revalues the asset. 

Construction costs may start to ease 

There is one genuinely useful development for anyone planning a build or fit-out. Underlying inflation rose from 2.7% in mid-2025 to 3.7% in September, and the cost of building new homes has been a significant driver, rising 5.3% over the year to September as builder discounting ended and higher materials and labour costs were passed through (ABS, September 2026). New dwellings account for 7.6% of the consumer price index. 

Builder margins tend to follow house prices with a lag of two to three quarters, so a falling market should eventually pull those margins back. The expectation is that annual building cost growth slows to around 4% by December, under 3% by March, and close to zero by late 2027, with materials the main thing holding it above water. 

For a developer or a business owner planning a premises upgrade, this raises a timing question. Waiting a few quarters could mean lower construction pricing, but delay carries its own costs, including rising rents, lost revenue and the chance that credit conditions tighten further. 

Five decisions worth revisiting now 

With the cash rate at 4.85% and a likely pause ahead, here are the areas where we are seeing the most useful conversations. 

Fixed or variable. A pause does not mean cuts are imminent, and the Board has been clear that inflation is still too high. For businesses whose margins cannot absorb another increase, fixing part of a facility can provide certainty for budgeting. For those with some capacity to absorb movements, keeping some variable exposure preserves flexibility if rates ease in 2027. A split approach is often sensible, but the right balance depends on your cash flow, your covenants and how long you expect to hold the debt. 

Refinancing and pricing. After 125 basis points of increases, loan pricing has moved, and not every lender has passed rate changes on in the same way. We regularly see established businesses sitting on facilities that were priced a long time ago and have not been reviewed. A refinance review can compare bank and non-bank options, including the fees, security requirements and flexibility that sit behind the headline rate. Non-bank lenders can price higher, but they may offer faster approvals, more flexible structures or greater willingness to look at a business in transition, which is often worth weighing against the rate difference. 

Working capital. When growth slows and costs stay elevated, cash flow is usually the first pressure point. Customers pay later, suppliers tighten terms and inventory sits longer. A working capital line, invoice finance facility or overdraft that is arranged while your trading is strong is far easier to obtain than one requested after a bad quarter. If there is any chance you will need liquidity in 2027, we would encourage you to put it in place early. 

Asset finance. Equipment and vehicle purchases are worth reviewing on the numbers. Higher rates raise the cost of finance, but there can be tax and cash flow reasons to proceed with a genuinely productive asset, and tax treatment depends entirely on your circumstances, so it is worth speaking with your accountant. Where it will lift productivity or revenue, a well-structured lease or chattel mortgage can preserve working capital for other uses. 

Commercial property. If you hold or are buying commercial property, the combination of higher rates and softening valuations means serviceability and loan-to-value tests deserve close attention. Lenders are generally sharper on these measures in a falling market. A conversation about structure, including whether your property and your trading entity are best funded together or separately, can help avoid unpleasant surprises at renewal. 

What we would watch next 

Three things will shape the outlook from here. The first is the next trimmed mean inflation reading, which will show whether the pass-through from fuel and commodity prices is fading or spreading. The second is the labour market, because a faster rise in unemployment would strengthen the case for the Board to hold, or eventually ease. The third is the property trough, since the timing and depth of the bottom will influence both credit appetite and consumer confidence. 

A conversation, if it helps 

If you would like to talk through how the latest rate decision affects your existing facilities, or whether a refinance, a fixed-rate split or a new working capital line makes sense for your business, Matt is always happy to have a no-pressure chat. 

And if you are weighing up an expansion, a property purchase or an equipment upgrade over the next six to twelve months, it can be valuable to talk early. Lender appetite shifts quickly, and a little preparation goes a long way. 

Disclaimer: This article is general information only and does not constitute personal financial, tax or credit advice. It does not take into account your objectives, financial situation or needs. Forecasts and figures may change. You should seek advice from a licensed professional before making any decision. Credit is subject to lender approval and criteria.