Mozo Money Moves: No more rate cuts in 2025, mortgage stress mounts in NSW, holiday borrowing, and a pre-Christmas cash crunch

Australia’s cost-of-living squeeze is showing no sign of easing. This week, the Reserve Bank of Australia (RBA) held the official cash rate steady. For households already stretched thin, the decision offered little relief. Mortgage stress has surged to record highs, household spending remains sluggish, and a growing number of Aussies are dipping into their savings to combat fiscal pressures.

As we head into the final stretch of 2025, the financial mood is mixed. Borrowers are desperate for a break, savers are searching for higher returns, and retailers are quietly adjusting expectations for the upcoming Christmas season. Meanwhile, economists warn that the recent rise in inflation has likely deterred the RBA from making any further cuts in 2025.

Here’s what moved the money needle this week.

RBA flags possibility of one more rate cut… in 2026

Australia’s central bank left the cash rate unchanged at 3.60% at its November meeting. The pause underscores the RBA’s ongoing focus on taming persistent inflation, signalling that price stability remains its top priority even as economic growth shows signs of slowing.

While the rate hold suggests stability, the underlying economic picture is far from simple. Filip Tortevski, senior analyst at Wealth Within, points out that “things are holding together,” but warns that several leading indicators paint a more cautious picture. Consumer confidence, job vacancies, and building approvals are all hovering at multi-month lows, highlighting a delicate balancing act for policymakers.

Inflation to decide the next move

Looking ahead, the RBA’s willingness to ease rates will be tightly linked to future Consumer Price Index (CPI) releases, now published monthly . Tortevski describes it as “make-or-break”: if inflation shows meaningful cooling, the RBA could lower rates further.

But acting too soon could be risky. Cutting rates before inflation falls below the 3% target would be a “red flag,” Tortevski warns, indicating that the economy may be weaker than it appears and potentially forcing the central bank into a reactive, rather than strategic, move.

In its latest statement on monetary policy , the RBA forecasts one more rate cut, next year:

Mortgage stress reaches new highs

It’s the financial paradox rocking New South Wales: despite the Reserve Bank cutting the cash rate three times this year, mortgage stress isn't easing – it's getting worse .

Picture this: You're a homeowner, maybe one of the half-a-million NSW households now struggling just to keep up. The rate cuts were supposed to be the cavalry, dropping your monthly repayments by a few hundred dollars. But here’s the rub: that saving is being devoured.

The true villain? The cost of living. That $370 a month you saved on your mortgage? It's gone – swallowed by soaring prices for groceries, insurance, fuel, and especially electricity. It's like patching a small hole in a dam when the whole wall is crumbling.

The data reveals the grim reality: over 51% of NSW households with a mortgage were in stress at the end of September. The problem is particularly acute in areas like Sydney's southwest, where high property prices forced new buyers to take on enormous loans. They bought when rates were rock-bottom, and even with the recent cuts, they’re still paying far more than they had anticipated.

For many, their savings are now drained, forcing them to turn to things like buy-now-pay-later or credit cards just to bridge the gap. It's a tale of two markets: those with cash reserves are alright, but for half of NSW borrowers, the small relief that rate cuts have provided is simply not enough to cover the unrelenting pressure of daily expenses. The stability of a job, not just the interest rate, has become the critical factor in making it through the month.

Beware the “phantom rate” if applying for a home loan

Even though you might be quoted a headline rate of around 5-6% p.a. on a new home loan, lenders will typically assess you as if you were borrowing at 8-9% p.a., adding an extra 3% buffer to test your serviceability.

At Mozo, we’ve labelled this the ‘phantom’ home loan rate.

This extra margin is legally required by the Australian Prudential Regulation Authority (APRA) and remains in place due to high household debt and above‑average credit growth.

Before the RBA’s cash rate cutting cycle in mid-2019, the buffer was set at 2%. As rates began to rise, it was bumped up to 2.5% and eventually landed at 3% in October 2021.

For aspiring borrowers or anyone thinking of refinancing, it’s important to remember that your borrowing power might be lower than you expect, so you may want to tighten up expenses, reduce revolving debt and build a solid savings buffer ahead of applying.

Holiday borrowing: personal loan vs credit card

Travelling overseas isn’t cheap, with trips costing thousands of dollars. If you haven't managed to save up, you're faced with the big financial choice: personal loan or credit card?

For this financial dilemma, your funding decision hinges on your borrowing behaviour.

The disciplined planner: personal loan

The personal loan is the friend of the structured spender. You get the whole amount – say, $8,000 – as a lump sum upfront. This is brilliant for booking all your big-ticket items like flights and accommodation right away, potentially securing a better price.

The real advantage is the fixed interest rate and the set repayment schedule. You know exactly how much to pay each month, and when the debt will be cleared. It provides peace of mind but beware any upfront establishment fees, which can add a few hundred dollars to the total cost.

The flexible spender: credit card

A credit card might be handy for those who want to chase frequent flyer and rewards points, need a bit of flexibility or are absolutely certain they can pay off the balance quickly.

If you can clear your balance during the interest-free period (typically 40-55 days), a rewards credit card could be a winner. However, if you don't pay it off, you'll be hit with the kicker: a much higher interest rate (often around 14%-25% p.a.). This revolving debt can quickly balloon the total cost of your trip. Plus, watch out for annual fees and the hefty cash advance fees if you take out foreign currency at an ATM.

Leading credit cards with introductory bonus points on Mozo

Don’t let cheap travel insurance cost you big

You’ve booked your flights, packed your bags, and clicked through what looks like a bargain‑basement travel insurance quote. But for many travellers, the cheapest policy can quickly turn into a more expensive problem.

What seems like all‑encompassing cover can hide major gaps. One of our colleagues at Mozo, a mother planning a family holiday, recounted that one policy quote she received was expensive, offered minimal cover amounts, and required her husband and sons to hold separate policies to her simply because she planned to stay on a little longer.

Is a family trust worth it for buyers and investors?

Family trusts are often pitched as a way to cut tax and protect assets, but a new guide from Mozo highlights why they’re not for everyone. Setting up a trust can cost more than $2,500, with ongoing accounting fees of $1,500 or more a year. For first-time investors or those with modest portfolios, the tax benefits rarely outweigh the costs.

The guide warns that holding property in a trust can also complicate borrowing, increase stamp duty, and forfeit exemptions like the CGT main-residence discount. Experts recommend speaking with a tax or legal adviser before taking the plunge and reviewing whether a simpler structure might make more sense in the early stages of investing.

For many, the smartest move may be to hold property personally, grow assets, and revisit a trust later – proving that sometimes the best money move is patience and planning.

Adding to the caution, Macquarie Bank has paused all new lending via family trusts and company structures, citing risks from social media “finfluencer” hype, according to Yahoo Finance . For investors, this makes reviewing your strategy essential: a trust isn’t just a structure, it’s a commitment, and the era of easy leverage through trendy setups may be ending.

CBA most considered but digital banks are popular

New data from YouGov’s Australia Consumer Bank Rankings 2025 reveals that when Aussies are shopping for a new banking product, Commonwealth Bank remains the first name on most people’s minds. Nearly one in three prospective customers (31.7%) say they’d consider CBA, keeping it well ahead of its Big Four rivals NAB (22.9%), ANZ (21.8%) and Westpac (20.0%).

But while the big banks still dominate, digital players are closing the gap. Revolut saw the biggest jump in customer consideration, rising 3.3 points year-on-year – a sign that tech-driven challengers are resonating with Australia’s increasingly digital-savvy audience. It should be noted that Revolut is a global fintech company and does not hold an Authorised Deposit-taking Institution (ADI) licence in Australia

That digital edge matters. More than four in five Aussies (82%) are likely to take up a new financial product in the next six months, and three fifths (61%) already hold or want multiple bank accounts. A third of consumers now log into mobile banking daily, underscoring just how central digital experience has become to loyalty and brand trust.

This focus on digital engagement has also prompted established institutions to launch their own app-only brands, such as AMP Bank GO and ANZ Plus, to compete in this space.

When it comes to customer satisfaction, however, smaller players are outperforming the giants. People First Bank topped the rankings, followed by Revolut and Great Southern Bank.

CBA’s win overshadowed by consumer-trust issue

While CBA holds the top spot in consideration among potential customers, its reputation has taken a blow. Consumer advocacy group CHOICE awarded CBA its fourth “Shonky Award” in 2025 – making it the most-awarded company in the history of the awards – for charging around 2.2 million customers approximately $270 million in fees which should not have been charged. 

CBA initially refused to issue bulk refunds and now says any compensation will be handled on a case-by-case basis. The contrast is stark: while the bank’s brand remains top-of‐mind, these revelations point to a deeper trust gap that could open the door for challengers.

In response to the CHOICE award, CBA acknowledged the importance of addressing mistakes made in the past . The bank stated that the majority of the issues that led to the award relate to historical matters and they have been working to remediate affected customers. CBA reaffirmed its commitment to simplifying its products and processes and improving customer outcomes.

Lock in a debt-free Christmas season

With only weeks until Christmas, now’s the time to plan for a festive season that doesn’t leave you paying for it in February. Mozo’s latest cheatsheet highlights a few easy wins: build a small “holiday war chest” by setting aside spare cash, taking on a no-spend week, and redeeming unused rewards or gift cards.

When it comes to gifts, set firm limits, shop the sales, and think experiences over stuff. And before the season kicks off, audit your bills and subscriptions – trimming unused services or switching providers can free up a handy cash boost.

The earlier you start, the better your chances of locking in a stress-free, debt-free summer.