RBA Rate Shock – The Borrower is Slave to the Lender

Well, this was not the rate decision we were expecting for July 2025. This morning the news was that a rate cut was imminent with more to come however, this afternoon, the normal post-decision flood of emails did not flow in. The banking world has been eerily silent while the news and social media has blown up with the disappointment of the Australian public. 

This shock is a reminder about how out of control we are in the grand scheme of things and how quickly it changes. We cling to things we think we know without considering risk. While interest rates are low, we tend to upgrade our lives, after all, the repayments aren’t much. In 2021 people made big decisions based on the promise that rates won’t rise until 2024. I felt that timeframe was unrealistic however, I was the odd one out and people were not concerned about over-extending.

The last time I saw this much uproar was November 2023. People were expecting a hold as the RBA ‘never raises’ on race day. However, the Melbourne Cup celebrations had a bitter aftertaste with a shock rate hike.

At the end of the day, we are not in control. We are at the mercy of banks, the economy and the consequences of our financial decisions. Some of which can be made rashly or emotionally. We often borrow money and think more about what the bank needs, how much we can borrow, how fast it will go through, and the shiny new thing we are buying rather than the gravity of what we are signing on the line for. The less we borrow, the less we repay, the faster we can have more freedom.

Proverbs 22:7

“The rich rule over the poor and the borrower is slave to the lender.”