Australia Housing Market White Paper 2026: In-Depth Analysis Series | Week 6 — Interest Rates: Borrowing Power Remains Compressed

Following Week 5’s examination of employment resilience and household income stability, Week 6 turns to the role of interest rates in shaping housing affordability and borrowing capacity. Drawing on Chapter 1 of the Australia Housing Market White Paper 2026 and the latest Reserve Bank of Australia cash rate data, this article examines how restrictive interest-rate conditions continue to constrain household borrowing power. The analysis also considers how mortgage stress varies across household and buyer types, helping explain why effective housing demand remains uneven.