Mortgage holders should prepare for further financial pain, with AMP chief economist Shane Oliver (pictured) tipping two additional interest rate ris
es and the first sustained national home price decline in years, news.com.au reported.
Oliver says the conditions that fuelled decades of property gains are losing momentum — and that the Reserve Bank is not done tightening yet. He expects the cash rate to peak at 4.85%, requiring two more hikes beyond the three already delivered in 2026 from the current 4.35%.
For borrowers, the numbers are stark. On a $600,000 mortgage, the three hikes already delivered this year have added $272 to monthly repayments since January. Two further increases would push that cumulative impact to nearly $500 extra per month compared to the start of the year.
That repayment pressure is already translating into broader stress. Roy Morgan's April 2026 data shows 28.2% of Australian mortgage holders — around 1.47 million people — are at risk of mortgage stress, with modelling projecting that figure would climb well above 30% under further tightening.
Oliver frames the challenge in generational terms, describing a housing "super cycle" — a 20 to 40-year period of sustained price growth — that was powered by falling interest rates, strong population growth, tight supply, investor tax concessions and the rise of dual-income households. He argues that engine is now sputtering under the weight of higher long-term rates, worsening affordability, tighter tax treatment for investors and a policy shift toward lower immigration.
The price outlook reflects that pressure.
"After 8.9% growth in 2025 we now anticipate a fall in national average home prices of around 1% this year and 5% over 2026–27," Oliver said.
That call is already finding support in live data. PropTrack's May 2026 Home Price Index shows national dwelling prices fell for the second consecutive month, with the national median sitting at $908,000 — prompting REA Group senior economist Angus Moore to conclude that "home price growth has clearly stalled as the effects of this year's consecutive rate hikes flow through."
On timing, Oliver is specific about the RBA's next move.
"The RBA has raised rates three times back to their prior 2023 cycle high. While it's likely to leave rates on hold this month we expect another hike in August," he said.
Despite the bearish outlook on prices, Oliver stops well short of predicting a market collapse. A crash, he argues, would need forced selling on a wide scale — something he considers unlikely without a significant deterioration in employment.
"A crash would require wide scale forced selling by homeowners – but without much higher unemployment forcing homeowners to sell this is unlikely as Australians will do whatever they can to keep servicing their mortgage," Oliver said.
He also acknowledges his own track record of underestimating the cycle's longevity.
"I thought it might be close to over five years ago, but it was extended by a surge in immigration coming out of the pandemic and constrained home building resulting in a chronic undersupply of housing," Oliver said.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
