Mortgage brokers face a more complicated backdrop in early 2026 as business activity holds up but confidence slips into the red, creating a more uncertain outlook for growth, jobs and mortgage rates.
The latest NAB Business Survey shows overall business conditions unchanged in February. However, confidence dipped below zero for the first time in almost a year following RBA’s February rate hike. NAB noted that “Business confidence fell 4pts (unrounded) to -1 index points”, unwinding gains from late 2025.
The survey also points to an uneven backdrop across sectors and regions, with services softening while manufacturing, wholesale and retail have improved, and Tasmania continuing to outperform most other states.
For brokers, resilient trading conditions support serviceability for business owners, self‑employed borrowers, and property investors. But falling confidence and softer hiring intentions suggest some borrowers may become more cautious about taking on new debt or stretching borrowing capacity, particularly if mortgage rates rise again.
Westpac economist Luka Belobrajdic said “Business conditions held steady in February after weakening at the turn of the year”, with the headline index at +7, around its long‑run average. Trading conditions improved slightly and profitability was flat, but the employment sub‑index fell 2 points to +3, signalling more caution on hiring.
Forward orders strengthened, rising to their highest level since late 2022, and capital expenditure intentions jumped to a three‑year high.
The NAB survey highlighted that “Capex rose 3pts, reaching its highest level in three years”, pointing to ongoing investment in capacity even as uncertainty builds. Capacity utilisation remained elevated, with most industries above average, and sitting around 1.5 percentage points above its long run average, suggesting businesses can still support growth if demand holds.
Even so, cost pressures re emerged. Purchase costs and labour costs both lifted to 1.5% in quarterly terms, while product prices rose more slowly, implying that firms are absorbing some of the squeeze. Persistent input cost growth keeps upward pressure on inflation, which in turn shapes the outlook for mortgage rates.
Retail price growth also ticked higher to around 1% in the month, reversing some of the recent easing in price pressures and underlining the risk that inflation may prove sticky.
See the full NAB report and Westpac commentary for more information and insights.
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