Repayments Are Back at Their 2024 Peak and Wages Grew 3.2%: Capacity Isn’t Coming Back on Its Own

1. What the RBA said on 13 August

Christopher Kent, the RBA’s Assistant Governor (Financial Markets), spoke in Sydney on 13 August 2026 at the Reuters NEXT Newsmaker Interview in the LSEG Insight Series. The speech was about the stance of monetary policy, and it contained the clearest official statement yet on what three rate rises in 2026 have done to households.

On the repayment burden: “Scheduled mortgage payments have risen and are now close to their 2024 peak as a share of household disposable income.”

On lending volumes: “Housing credit growth, which moves closely with housing prices, has started to slow, with a noticeable decline in new lending for housing.”

On the forward indicators brokers watch: “Forward indicators such as auction clearance rates have also declined to be below their long-run averages.”

On prices: “Housing prices have declined in Sydney and Melbourne, with declines becoming increasingly broad-based.”

And on the setting itself: “At its meeting earlier this week, the Board judged that monetary policy is somewhat restrictive,” with the cash rate “around the top of the range of central estimates of the neutral rate from the various models we estimate.”

2. What the ABS said six days later

On 19 August the ABS released the Wage Price Index for the June quarter 2026. Annual wage growth was 3.2 per cent seasonally adjusted, with quarterly growth of 0.8 per cent. The public sector ran at 3.4 per cent annually against 3.1 per cent in the private sector.

ABS head of prices statistics Rachael McCririck noted the direction: “Annual wage growth of 3.2 per cent is slightly down from 3.4 per cent at the same time last year.” She also gave the mechanism behind it: “The decline in the share of jobs with larger wage rises has contributed to slower wage growth overall.”

That mechanism is the number brokers should hold on to. Seventy-nine per cent of jobs recorded wage changes of under 4 per cent over the 12 months. Wage growth is not just modest in aggregate; it is narrowly distributed. The large increases that used to pull individual borrowers into a higher bracket are happening to fewer people.

For context, McCririck also noted that annual wage growth “remains above the 2.2 per cent that we were seeing in the December quarter 2019 prior to the COVID-19 pandemic”. This is not a wages collapse. It is a wages plateau, arriving at the same moment as a repayment peak.

3. Put them together and the conclusion is uncomfortable

Borrowing capacity moves on three things: the rate a lender assesses at, the borrower’s income, and the borrower’s existing commitments.

Take them in turn against this week’s data. The assessment rate is a function of the cash rate plus the serviceability buffer, and the RBA has just described the current setting as somewhat restrictive and near the top of neutral estimates — which makes a near-term reduction in assessment rates a hope rather than a plan. Income growth is running at 3.2 per cent and decelerating, with four in five jobs seeing under 4 per cent. And existing commitments are, by the RBA’s own measure, consuming a share of disposable income close to the 2024 peak.

All three levers are pointing the same way. That is the whole argument of this article: a broker who has spent 2026 telling clients to wait until capacity improves has been giving advice that the data does not support.

4. The client conversation this changes

There is a specific conversation happening in broker offices right now that needs updating.

It goes: your borrowing capacity is lower than you wanted, rates should come down eventually and your income will rise, so let’s revisit in six months. It is a comfortable conversation because it defers a disappointment. It is also, on current data, a conversation that will produce the same answer in six months and a client who has lost half a year.

The honest version is harder and more useful. Capacity is unlikely to improve materially through rates or wages inside this financial year. If the client’s goal is achievable, it will be achieved by changing something structural — the deposit, the debts, the purchase price, the ownership structure, or the lender. If it is not achievable, the client is better off knowing that now and building toward it deliberately than waiting for a macro change that the central bank has effectively said is not imminent.

This is also better under the Best Interests Duty. A recommendation to wait, recorded without reasoning, is exactly the kind of generic file note that is hard to defend. A recorded conversation about which specific lever the client is going to pull, and why, is not.

5. The levers that actually move capacity right now

If macro conditions are not going to help, these are what is left. None are novel. The point is that they are now the whole game rather than the margin.

• Credit card and BNPL limits. Undrawn limits are assessed, not balances. Reducing or closing unused facilities is the fastest capacity gain available and costs the client nothing.
• HECS/HELP treatment. Lender approaches vary meaningfully, particularly for borrowers close to paying the balance off. This is one of the largest sources of capacity variation between lenders on the same file.
• Assessment rate differences. Lenders do not all assess at the same floor or buffer, and the spread matters more when everyone is close to their limit.
• Income type recognition. Overtime, bonus, commission, allowances, rental income and parental leave income are treated inconsistently across the panel. On a marginal file, the lender that recognises the client’s actual income composition is the difference.
• Debt consolidation. Where high-rate consumer debt is dragging serviceability, consolidating it can free more capacity than any rate negotiation will.
• Loan term and structure. A longer term reduces assessed repayments. It also increases total interest, and that trade-off belongs in the client conversation and on the file.
• Ownership and applicant structure. Who is on the application, and in what proportion, can change the outcome — but this is where tax and legal consequences arise, and it is a referral to their accountant, not a broker decision.

6. What this means for your own pipeline

Kent’s comment that there has been “a noticeable decline in new lending for housing”, alongside auction clearance rates below long-run averages, is a description of your pipeline as much as the market’s.

Two practical implications follow. First, conversion matters more than volume. In a market with fewer applications, the cost of a file that falls over at assessment is higher, because there is less behind it. Front-loading the capacity work — getting limits reduced and debts tidied before submission rather than after a decline — is worth more than it was in a busier market.

Second, the clients most affected by a capacity plateau are the ones most likely to need a broker. A borrower who comfortably qualifies anywhere does not need help choosing. A borrower who qualifies at three lenders out of thirty does. That is the market this data describes, and it is a market that favours brokers who know their panel’s serviceability quirks in detail.

7. What to watch next

• Whether the RBA repeats the “top of neutral” framing in subsequent communication, which would firm up the ceiling on further tightening.
• The September quarter Wage Price Index, and whether the share of jobs receiving under 4 per cent keeps growing.
• Any movement on the serviceability buffer, which is the single fastest way capacity could change.
• Lender assessment rate floors, which move independently of the cash rate and are where competitive differences show up first.
• Auction clearance rates as a leading indicator of your own application volumes.