For mortgage brokers, the message is clear: the worst of the slowdown may be behind us, but borrowers shouldn’t be banking on fresh RBA rate cuts any time soon.
Westpac senior economist Pat Bustamante (pictured left) has unveiled the Westpac Nowcast (Westpac-Now) – a new real-time gauge of activity built from 64 economic and financial indicators plus internal banking data, including the bank’s card tracker and transaction flows.
“The Westpac Nowcast (Westpac-Now) measure of current activity will help assess whether available data, including Westpac’s internal indicators, provide a signal or just noise,” Bustamante said.
By extracting a single “common factor” – the Westpac Monthly Activity Indicator (Westpac-MAI) – Westpac finds that the economy has quietly shifted gears.
It “shows that after an extended period of weakness, activity picked up in the second half of 2024 and gained momentum over the two quarter to September 2025,” Bustamante said.
Westpac’s models also suggest the surprise 0.6% quarterly growth in Q2 2025 was “no fluke”, and that the very weak Q1 result was more likely noise than the start of a new downturn.
NAB’s latest Forward View – Australia broadly echoes Westpac’s message: growth is improving, but the inflation backdrop has become more challenging.
“Overall, we continue to see a relatively soft landing for the economy, with only small tweaks to our 2026 growth forecast (slightly softer) and unemployment rate (slightly higher) forecast over the past month,” said Sally Auld (pictured right), NAB's chief economist.
Q3 inflation “was stronger than the RBA's expectations and confirmed a material and broad-based acceleration from its H1 2025 pace.” NAB now expects underlying inflation to stay above 3% for the next couple of quarters, before gradually easing back into the target band and moderating to about 2.5% over 2027.
With growth around trend, unemployment relatively low and inflation stickier than hoped, “we see the RBA on hold at 3.6% for the foreseeable future,” NAB’s economics team said.
For brokers, that points to rate stability rather than further relief, even as the economy feels healthier on the surface.
NAB’s read on the consumer suggests household spending is cooling, but far from collapsing.
NAB transactions data for October shows a 0.7% month-on-month rise in spending, with strength in personal goods, recreation and hospitality, pointing to ongoing resilience in discretionary outlays.
Confidence has also turned a corner.
“The Westpac–MI consumer sentiment index also improved in November, rising by 12.8% mom, the second-largest monthly increase on record,” Auld said, adding that it delivered the first net positive reading since early 2019 (excluding the COVID period).
On the jobs side, NAB expects unemployment to hold around 4.4% – close to the RBA’s own forecasts.
“The unemployment rate fell to 4.3% in October, reversing half of September’s rise to 4.5%,” the bank said, cautioning that monthly moves are volatile but noting that trend employment growth looks “on a firmer footing”.
Forward indicators show mixed momentum – job ads and vacancies have eased, but capacity constraints remain elevated, with more firms citing labour as a key limit on output. That combination supports ongoing employment growth, but without the kind of blowout labour market that would force the RBA to hike again.
For brokers, the housing section of NAB’s outlook will be particularly relevant.
“The latest building approvals data suggests that supply will continue to fall short of demand despite slowing population growth which will support prices further,” Auld said.
NAB expects house prices to rise by around 6% over 2026.
Rents remain under pressure, with advertised rent growth running at 0.5% per month over the three months to Octoberand vacancy rates below 2% across all capitals. NAB expects rents “to continue to support rents growth that runs ahead of overall inflation”.
That combination – rising prices, tight rental markets and limited new supply – signals ongoing demand for finance from first-home buyers, investors and upgraders.
NAB emphasises that the Q3 inflation print was “hot”, with trimmed mean inflation at 1% quarter-on-quarter and 3.0% year-on-year, and a much larger share of CPI components running above the 2.5% midpoint.
“While we continue to expect inflation will return to the mid-point of the RBA’s target band by the end of the forecast horizon, recent inflation data points to a much less benign inflation backdrop,” Auld said. “We forecast inflation in the top half of the RBA’s target band over 2026.”
Putting it all together, “we now expect the RBA to remain on hold at 3.6% for the foreseeable future.”
NAB also notes that:
Given that mix, NAB expects the RBA to maintain policy in “marginally restrictive” territory, even though its estimate of long-run neutral is closer to 3%.
For brokers, the combined Westpac–NAB signals translate into a clear set of talking points:
For mortgage brokers, 2026 is shaping up as a year defined less by rate shocks and more by careful structuring, product selection and client education, as households navigate a stronger economy – but one where housing and living costs remain under pressure.
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