The Reserve Bank of Australia (RBA) implemented a significant interest rate increase of 4.25 percentage points over 2022 and 2023. Despite this, households with variable-rate mortgages didn’t drastically change their spending patterns, even as their annual mortgage payments rose by an average of $14,000.
This resilience in spending was largely attributed to the substantial savings many homeowners had accumulated in their offset and redraw accounts. These savings provided a financial cushion, allowing families to maintain their standard of living despite the increased costs of borrowing.
By late 2025, many households continued to benefit from these savings buffers. In fact, 40 percent of mortgage holders had enough funds in their offset and redraw accounts to cover their minimum mortgage payments for up to two years. This financial security suggests that the most recent rate hike by the RBA will likely have a minimal impact on consumer spending through the cash flow channel.
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“This indicates that the latest interest rate rise will likely have a limited impact on spending through the cash flow channel.”
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