Picture a dual-income couple in their early 40s who spent the first half of the year modelling a new build in a growth corridor. Their spreadsheet was built on the rates of February, and every line of it now needs updating.
What the November decision changed
On Melbourne Cup Day the Reserve Bank moved the cash rate up by a quarter of a percentage point to 4.85 per cent, the highest level since late 2008. It was the fifth move of 2026, and the cash rate is now 1.25 percentage points higher than where it started the year.
The vote was not unanimous. Six members voted to hike the cash rate, while three voted to leave it unchanged. The bank's statement points to a further tightening in financial conditions as needed, given its revised inflation outlook. Headline inflation was 4.3% in September, above market expectations of 4.2%, and inflation is now expected to remain elevated through much of 2027.
Views on the next move differ. ANZ sees a risk of the cash rate reaching 5.1% by December or February, while Goldman Sachs expects the cash rate to remain at 4.85% following the November meeting and stay at that level for most of 2027. Nobody can say which view will hold, so it is worth modelling both.
When a rising rate cycle changes the picture
For a new build bought on a standard loan, a higher cash rate usually means higher repayments once the loan is in principal and interest. Lenders also assess how much they will lend against a rate buffer, so a higher rate can reduce borrowing capacity before you even reach settlement. Banks set their own rates, so the cash rate is only one input.
HomePay adds a timing point. Under HomePay there are no payments for the first 12 months during construction, but the interest for those months is borrowed and added to the loan rather than waived. A higher rate during construction means a larger amount added to the balance before standard repayments begin. HomePay is not a credit product from EWC, and the credit terms come from the licensed credit provider.
Rising rates also meet a softer market in some areas. House prices fell for a seventh consecutive month in October, according to recent reporting. Price movements are one factor among many, and they do not change what a property rents for. Rental income should come from an independent rental appraisal, with vacancy periods built into the numbers.
What it means for SMSF buyers
The SMSF picture has changed more than the rate itself. From 10 August 2026, SMSFs can no longer borrow to buy residential property. Existing LRBAs entered into before that date continue as usual. A contract exchanged before the cut-off is treated differently, and it is protected even if settlement occurs after that date.
New builds get no carve-out. The ban applies to all residential property without distinction between new builds and established property. A fund can still buy residential property outright with fund cash, and borrowing through an LRBA remains possible for commercial property. SMSFs can still borrow via an LRBA to purchase commercial, industrial, or retail property that meets the business real property definition.
For new residential purchases, EWC works with the unit trust structure. The property is held in an unrelated unit trust that the fund invests in, and the borrowing sits in that trust through a broker who specialises in these structures. Whether a trust is unrelated must be confirmed by an SMSF specialist accountant or lawyer, and EWC does not provide that advice.
A worked example
Take a $600,000 loan over 30 years, principal and interest. These figures are illustrative and are not a quote from any lender.
At 6.00 per cent, the monthly repayment is roughly $3,597. At 6.25 per cent, it is roughly $3,694.
That is about $97 a month, or around $1,165 a year, from a quarter point. The same arithmetic applies to a fund's loan, but the tax treatment of the interest and income depends on the fund's phase and structure. Accumulation and pension phase are treated differently, so an SMSF specialist accountant should confirm those figures for your fund.
If contributions are part of the funding plan, the limits matter too. The non-concessional contributions cap is $130,000 for 2026-27, and the general transfer balance cap is $2.1 million for 2026-27, per the ATO.
What to do next
- Ask a licensed mortgage broker to model repayments at several rates, including higher ones, and to show the serviceability buffer their lenders apply.
- Ask an SMSF specialist accountant or lawyer whether a proposed unit trust is unrelated, and how interest and income would be treated in your fund's phase.
- Request an independent rental appraisal and the written HomePay terms, including how the 12 months of borrowed interest is added to the loan.
EWC refers finance to its broker network and takes no commission on any loan. If you want to talk through how these numbers fit your situation, book a free call at https://elitewealthcreators.com/booking/.
General information only, not personal financial advice. Speak with a licensed adviser before acting.