Three rate rises now in play, and a phone call worth 60 basis points

Borrowers should be budgeting for a series of rate rises rather than a single move, according to Property Buzz host Phil Tarrant, who said the weight of economist commentary was pointing to an increase at next week's Reserve Bank meeting.

Speaking on the Property Buzz podcast with Momentum Media director Alex Whitlock, Tarrant said the expectation had firmed even after the latest labour force figures showed unemployment moving higher.

"A lot of people were pointed to that saying, hey, hang on a second, well, that's probably a good indicator that the economy is not in the root health that the government would lead you or make you think you believe," he said. "But pretty much every single major economist that I rely upon are still saying, mate, too late. It's going up."

Tarrant said the Reserve Bank was unlikely to take chances with inflation. "It's easier to get it wrong, I think, for them and put rates up than get it wrong and leave them," he said.

Whitlock said there was a good chance of a further rise the following month, and that market talk had shifted quickly. "This time last week, it was two rate rises. But now they're talking about three rate rises," he said.

Both cautioned that the outlook remained fluid, with Tarrant noting that offshore politics could change the picture at short notice. His advice was blunt: "I think you should be factoring in a number of rate rises, tightening the belt."

The 60 basis point phone call

Whitlock said he had recently tested his own lender after receiving a rate increase notice that did not specify his new repayment amount.

"Phoned him up and I went, I'm thinking about moving. They took off 60 basis points off my loan like that," he said.

Tarrant said the reduction was substantial in the current environment. "60 basis points is a lot considering you're going to get 25 basis points next week, another 25 basis points," he said, suggesting the lender may have been pricing in the expected increases.

The pair urged borrowers to review their loans now rather than after the next move. "Make sure you go and look at all your mortgage interest rates. Make sure they're as tight as possible," Tarrant said.

Rates feeding into a weaker market

The rate outlook comes as the residential market softens. Tarrant pointed to commentary published this week in the Australian Financial Review's power issue, which described a housing downturn that had sent capital city prices tumbling, with some analysts expecting a peak to trough correction of 10 per cent nationally, making it one of the most severe in the past 40 years.

The same analysis attributed the fall to a combination of rising interest rates, Labor's winding back of investor tax breaks and cost of living pressures, and noted that the slowdown was stifling investment in new dwellings and worsening the national housing shortage.

Tarrant said development activity was clearly waning, citing a Western Sydney builder that had been seeking a funding bailout and had since stood down staff, leaving thousands of projects where buyers had already committed money in limbo.

"Don't think the government's going to come and bail you out and get your money back," he said, describing the outcome as a significant consequence still to play out.

He also referenced analysis by the National Housing Supply and Affordability Council showing the federal government will miss its target of 1.2 million homes, set for mid-2029, by 18 months.

Listen to the full episode: The Property Dream is Rapidly Changing