Why Your Bank Can Raise Rates Even When the RBA Doesn't

Updated October 2026 by Albert Waldron, Awesome Lending Solutions. This article first appeared on awesomelendingsolutions.com.au.

Many borrowers assume their home loan rate only moves when the Reserve Bank (RBA) changes the cash rate. That's not always true. Banks can, and sometimes do, change rates on their own. Here's why that happens and what you can do about it.

What the RBA controls

The RBA sets the cash rate, which is the rate banks charge each other for overnight loans. It's the RBA's main tool for managing inflation. In 2026, the RBA raised the cash rate four times, taking it to 4.60% at the end of September, its highest level since 2011.

When the cash rate moves, most lenders follow quickly. But the cash rate is only one part of what it costs a bank to lend you money.

Why banks can raise rates when the RBA doesn't

1. Funding costs

Banks get money from deposits and from borrowing in Australian and overseas markets. If those costs rise, banks may pass them on, even if the cash rate stays the same.

2. Regulation

The banking regulator, APRA, sets rules on how much capital banks must hold and how they lend. Back in 2015, APRA's limits on investor lending led many banks to raise investor and interest-only rates outside the RBA cycle. In February 2026, APRA introduced a new limit on loans where total debt is six or more times income. Rules like these can affect how banks price certain loans.

3. Risk and loan type

Banks price investor, interest-only and high-LVR loans differently. They may lift rates on one type of loan to slow demand.

4. Competition and profit

Banks also set rates based on how hard they're competing for customers and their own profit targets.

Why new customers often get better rates

Many lenders offer sharper rates to attract new borrowers than they give existing ones. Over time, a loyal customer can end up paying noticeably more than someone who just walked in the door. This is sometimes called the "loyalty tax".

What you can do

1. Know your rate. Check your latest statement.
2. Compare it with new-customer rates for a loan like yours.
3. Ask your lender for a rate review. Many will lower your rate if you ask, especially with a competing offer.
4. Consider refinancing if your lender won't move.
5. Use an offset account to reduce the interest you pay.
6. Think about a split loan if you'd like some certainty while rates are rising.

An example

Lisa's $600,000 variable loan was at 6.64% after the 2026 rises. New customers with a similar loan were being offered about 6.14%. Her broker asked her lender for a review, and when they wouldn't match it, helped her refinance. Her repayments fell by about $200 a month.

Frequently asked questions

Can my bank raise my rate without the RBA moving?

Yes. Variable rates can change at any time. Your lender must tell you about the change.

Do banks always pass on RBA rate cuts in full?

Not always. Some pass on more or less, and timing can vary.

How often should I check my rate?

At least once a year, and after every RBA change.

Talk to Awesome Lending Solutions

We can check your rate against the market and, if there's a better deal, help you get it, whether that's with your current lender or a new one. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.

Holiday Homes as Investments: The Good, the Bad and the Ugly

Updated October 2026 by Albert Waldron, Awesome Lending Solutions. This article first appeared on awesomelendingsolutions.com.au.

Every holiday season, we hear from two groups of people. Some have just come back from a great break and want to buy a holiday home in the same spot. Others already own one and are wondering if it was a good idea. A holiday property can be a wonderful asset, but it can also be a costly mistake. Here's what to weigh up.

The good

• Somewhere to get away: a place your family can enjoy for years.
• Rental income: in popular spots, peak-season rent can be strong.
• A future home: some owners plan to retire there one day.
• Possible growth: well-located coastal and lifestyle areas can grow in value over time.

The bad

• Seasonal income: rent can be high in summer and very low in winter.
• Higher costs: short-stay management fees, cleaning, furnishing and insurance cost more than a standard rental.
• Tougher lending: some lenders treat short-stay income cautiously, or only count part of it.
• Local rules: many councils and states now regulate short-term rentals. In NSW, for example, short-term rentals must be registered and some areas limit how many nights a year you can rent a whole home.

The ugly

• Smaller markets: holiday towns often have fewer buyers, so prices can swing more and properties can take longer to sell.
• Personal use limits tax deductions: you can only claim costs for the times the property is rented or genuinely available for rent. The ATO looks closely at holiday homes.
• Negative gearing changes: for established homes bought after 7:30pm on 12 May 2026, rental losses can't be used to reduce tax on your wages from 1 July 2027.
• Capital gains tax: a holiday home isn't your main residence, so CGT applies when you sell. From 1 July 2027, the 50% discount is replaced by indexation and a 30% minimum tax.

Tips before you buy

1. Visit out of season. A town that buzzes in January may be quiet in July.
2. Check local short-stay rules with the council before you sign.
3. Get real rental figures from local property managers, not just peak-week prices.
4. Budget for empty weeks and higher running costs.
5. Check how lenders will treat it. Some count only part of short-stay income, and some have rules on small or remote properties.
6. Talk to your accountant about how personal use affects deductions.

An example

Mark and Jenny want a $750,000 beach house on the NSW South Coast. They plan to use it for four weeks a year and rent it out the rest of the time.

• Peak-season bookings look strong, but winter is quiet, so their realistic income is much lower than the summer rate suggests.
• Because they use it themselves, they can only claim some of the costs.
• Their broker uses equity in their home for the deposit and sets up a separate loan split, so the interest is easy to track.
• They keep a cash buffer for repairs and empty weeks.

Is a holiday home right for you?

It can be, if you love the area, can comfortably cover the costs, and see it as a long-term lifestyle asset rather than a quick money-maker. If your main goal is investment returns, a standard rental in a strong market may do the job with less risk.

Frequently asked questions

Can I get a home loan for a holiday home?

Yes. It's usually treated as an investment or second home loan, depending on how you use it.

Do lenders count Airbnb-style income?

Some do, often only part of it and with a history of bookings. Policies vary.

Can I claim all the costs?

Only for the times it's rented or genuinely available for rent. Personal use reduces what you can claim.

Talk to Awesome Lending Solutions

Every situation is different. At Awesome Lending Solutions, we can show you how lenders will view a holiday property and help you set up the loan the right way. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.

How Many Investment Properties Do You Need to Retire?

Updated October 2026 by Albert Waldron, Awesome Lending Solutions. This article first appeared on awesomelendingsolutions.com.au.

Many investors dream of the day their rental income replaces their wage. But when you ask how many properties it will take, most people aren't sure. The honest answer is that the number of properties matters far less than the amount of equity you own and the income it produces. Here's a simple way to work it out.

Start with the lifestyle you want

Before you think about properties, think about money. How much would you need each year to live comfortably in retirement? Include:

• Everyday living costs, like food, bills, transport and insurance
• Travel, hobbies and helping family
• Health costs, which usually rise as we get older
• A buffer for repairs, vacancies and surprises

Many people land somewhere between $60,000 and $100,000 a year. Your number is personal, and it's the starting point for everything else.

It's about equity, not property count

Ten heavily mortgaged properties can produce less spare cash than two properties you own outright. That's because rent goes to the bank first. What you live on is the rent left after interest, rates, insurance, strata, maintenance and management fees.

As a rough guide, a residential property might return a net yield of around 2.5% to 4% of its value after costs, once it's debt-free.

A simple example

Sarah wants $80,000 a year in retirement.

• If her properties return a net 3.5% a year once debt-free, she needs about $2.3 million in clear equity ($80,000 ÷ 0.035).
• That could be three debt-free properties worth about $770,000 each, or four or five properties with some debt still owing.
• Her super and the Age Pension (if she's eligible) could reduce the amount she needs from property.

So the real target isn't "five properties". It's "about $2.3 million of debt-free property, or a mix of property and super that produces the same income".

Growth phase, then consolidation phase

Most successful property investors move through two stages:

1. Growth phase: buy well-located properties, hold them and let equity build over time.
2. Consolidation phase: stop buying, pay down debt (sometimes by selling one property to clear others), and switch the focus to income.

Selling can trigger capital gains tax, so plan this with your accountant well before you retire.

What's changed for investors in 2026

• Negative gearing: for established homes bought after 7:30pm on 12 May 2026, rental losses can't be used to reduce tax on your wages from 1 July 2027. New builds keep the existing rules.
• Capital gains tax: from 1 July 2027, the 50% CGT discount is replaced by indexation and a 30% minimum tax on gains.
• Interest rates: the cash rate rose four times in 2026 to 4.60%, which makes holding costs higher.
• Lending limits: since February 2026, APRA limits how many loans banks can write where total debt is six or more times income. This can affect investors with several loans.
• SMSF borrowing: new borrowing to buy residential property inside an SMSF has been banned since 10 August 2026.

These changes make cash flow, structure and planning more important than ever.

Five steps to build your plan

1. Work out your retirement income target.
2. Check what your super and other investments are likely to provide.
3. Calculate the debt-free property equity you need to cover the gap.
4. Map out a realistic buying plan based on your borrowing power and cash flow.
5. Plan your consolidation phase, including when and how you'll reduce debt.

Frequently asked questions

Can I really live off rental income?

Yes, many people do, but it usually takes a clear plan, low or no debt, and a buffer for vacancies and repairs.

Is it better to own more properties or fewer, better ones?

Fewer, well-located properties are often easier to manage and can grow more in value. The right mix depends on your budget and goals.

How long does it take?

Most investors need 15 to 25 years or more. Starting earlier gives your properties more time to grow.

Talk to Awesome Lending Solutions

Every situation is different, and the right plan depends on your goals, income and timing. At Awesome Lending Solutions, we help investors structure their loans for both the growth and consolidation phases, and we work alongside your accountant and financial adviser. Call us on 02 7904 9560 or visit awesomelendingsolutions.com.au to book a chat.

This article is general information only. It does not consider your objectives, financial situation or needs, and it is not financial, tax or legal advice. Rules, interest rates and laws were current as at October 2026 and can change. Speak with a licensed professional before making any decision. Albert Waldron is a Credit Representative (CR 407514) of AFG's Australian Credit Licence 389087.

Is A Self Managed Super Fund Right For Me

A self-managed superannuation fund (SMSF) will give you more control over your super and retirement planning, but it’s important to understand the responsibilities that come with being a trustee.

When Is It A Good Time To Start A Self Managed Superannuation Fund?

When Is It A Good Time To Start A Self Managed Superannuation Fund (SMSF)?

This is one of the most common questions we get from clients on SMSF's. There isn’t any one particular factor, but a combination of circumstances that may help you to decide when to start an SMSF and these include: