What the latest inflation data means for borrowers with the upcoming February RBA decision

The Reserve Bank of Australia (RBA) hands down its next cash rate decision on 3rd February 2026, the first of the year. If you have a home loan, it is easy to feel like you need to wait for the headline and then react, rather than being proactive. 

We believe the better approach is to access the data the RBA is looking at, then make sure your mortgage is positioned for a range of outcomes.

Inflation is moderating, but we are not back in the target band yet

The latest monthly Consumer Price Index (CPI) data shows inflation is easing. Consumer Price Index (CPI) was up 3.4 per cent over the year to November 2025, down from 3.8 per cent in October. Underlying inflation dipped a little, moving from 3.3% to 3.2%.

Importantly, the ABS noted that Black Friday price falls were broadly similar in November 2024 and November 2025, so discounting was not a major driver of the change in annual inflation from October to November. That is a constructive sign that the trend is not just about one big sales period.

Digging deeper into the RBA November media release

• Housing remains the largest contributor to annual inflation, up 5.2%.
• Food and non-alcoholic beverages rose 3.3%.
• Transport rose 2.7%.

The easing is also coming through in key areas

• Electricity inflation cooled. Electricity was up 19.7% & over the year to November, compared with 37.1% to October.
• Services inflation eased to 3.6% (from 3.9%), helped by lower domestic holiday travel inflation after a strong October.
• Rents are still rising, up 4.0% over the year, which continues to put pressure on household budgets.

What this means heading into February

The RBA’s goal is to return inflation to the 2-3% target range. We are moving in the right direction, but we still have a way to go. That is why the RBA has stayed cautious, even as inflation has moderated.

My view is that the latest inflation data reduces the urgency for another rate hike in February. I expect the RBA to keep the cash rate on hold and maintain a firm, data-dependent stance. In plain English, that usually means: “we are encouraged, but we need more evidence”.

Looking down the road, if inflation continues to ease through 2026, it is reasonable to think the next move could be down rather than up. In our view, cuts later in the year are possible, but they are not a given and they will depend on how inflation and the labour market evolve.

Four proactive steps to take now

Do a rate review (do not be complacent)

Lender competition has been increasing and pricing can differ between owner-occupied loans, investment loans and different borrower types. A quick review can show whether your current rate is still competitive and still works for your financial goals.

Build a buffer where you can

If your finances allow it, it’s always ideal to pay a little extra off the loan or keep spare cash in an offset account. The goal is flexibility and financial security. A buffer helps whether rates rise, hold, or fall.

Check your loan structure, not just the rate

The cheapest rate is not always the best fit. Features like offset accounts, redraw and split loans (part fixed, part variable) can improve day-to-day cash flow and reduce risk, depending on your situation. You need to start thinking of your long-term financial goals and making decisions based on that, rather than short-sighted decisions. 

Talk to a mortgage broker

If you want a clear view of where your loan sits today and what options you have before rates shift later in 2026, we can help. Our team of mortgage brokers can help! Through our complimentary strategy session, we will review your rate, goals, loan structure and lender options that will let you take proactive action on your finances.

General information only. This article does not consider your personal objectives, financial situation, or needs.

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Andrew Mirams

Andrew Mirams is the Founder and Managing Director of Intuitive Finance, a highly respected and multi-award winning Mortgage Brokerage dealing with clients all over Australia and around the world. Andrew has over 30 year’s experience in the finance industry and has assisted clients to secure over $2 Billion in mortgage lending over his time. Intuitive Finance deals with all aspects of lending from helping first homebuyers, someone wanting to upgrade their home or starting out and experienced investors looking to secure that next investment property, we can assist with all those requirements. We also specialise in working with self-employed clients and getting them the best outcomes, along with Commercial and Asset finance solutions. Intuitive Finance is highly regarded in the industry and has been recognised as a national winner of the MFAA customer service award and also one of the finance industry’s top mortgage employers. Our brokers also feature regularly in the Top 100 mortgage brokers list in Australia.

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