There were no barriers in sight at the Reserve Bank of Australia (RBA) on Melbourne Cup day, with the national cash rate cantering upward to reach 2.85%.

But the jump was less than some people expected, with fears the central bank might gallop to a 50bp lead on October's 2.6% rate.

The fears came amidst ABS data released last week revealing inflation has spiked to 7.3% - the highest inflation figure in more than 30 years.

Nevertheless, the seventh simultaneous month of rate hikes isn't expected to see mortgage holders and potential buyers experiencing strong wins in lending fields.

Race to reach "sustainable balance between demand and supply"

RBA governor Dr Phillip Lowe admits Australia's inflation figures, and that of most countries, are too high and said that while global factors are a big reason behind the high figures, domestic factors aren't helping either.

He noted strong domestic demand - and in particular, demand relative to the ability of the economy to meet it - was crucial to keep inflation under control.

But to return inflation to target will require a "more sustainable balance between demand and supply", Dr Lowe said.

More giddy ups expected

In bad news for already struggling mortgage holders and potential buyers, conquering the current inflation handicap means losses - rather than wins - are likely in the short term.

The Reserve Bank of Australia (RBA) is now betting on CPI inflation being around 4.75% in 2023 before dropping to "a little above" 3% in 2024.

"But a further increase in inflation is expected over the months ahead, with inflation now forecast to peak at around 8% later this year," Dr Lowe explained.

"Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices, and slower growth in demand."

Don't expect golden trip anytime soon

CoreLogic's Tim Lawless is highly concerned for both mortgage holders and in particular, recent borrowers.

The latter group in particular is now far too close to "unchartered waters" when it comes to their ability to service loans, Mr Lawless explained.

"This situation is made harder due to persistently high cost of living pressures that were unlikely to be factors at the time of loan origination," he said.

"The cumulative 2.75% rise ... since May takes home loan rates above the 2.5% serviceability buffer that was used before October 2021 and close to the current 3% serviceability buffer."

Last week's Federal Budget  has also done little to ease concerns about cost-of-living spikes and rising energy bills.

"The cash rate is now 30bps above the pre-COVID decade average and at the highest level since April 2013," Mr Lawless said.

Home buyers yet to enter the property mounting yard are also facing a growing stall on their borrowing capacity.

Still some wins to cheer about

However, in some good news, Dr Lowe said he believes medium-term inflation expectations was well anchored - at least for now.

The nation's economy is also continuing to experience solid growth while trade terms are boosting national income to a record level.

"The unemployment rate was steady at 3.5% in September, around the lowest rate in almost 50 years," Dr Lowe said.

However, he added that such good news is expected to moderate in 2023.

And he also isn't wearing blinkers when it comes to the struggles of many mortgage holders and potential buyers, acknowledging that budget pressures were high while consumer confidence has dropped.

"The Board recognises that monetary policy operates with a lag and that the full effect of the increase in interest rates is yet to be felt in mortgage payments," Dr Lowe said.

"Higher interest rates and higher inflation are putting pressure on the budgets of many households.

"But working in the other direction, people are finding jobs, gaining more hours of work, and receiving higher wages.

"Many households have also built up large financial buffers and the saving rate remains higher than it was before the pandemic."

Mr Lawless is also unblinkered when it comes to pointing out that rising interest rates and higher debt costs could mean the outlook for housing values and property market activity is skewed to the downside.

"Although the rate of decline in housing values has eased in some cities over recent months, we are expecting housing values to continue to trend lower until interest rates find a ceiling," he said.

At the same time, Mr Lawless isn't wearing a long face but rather, remaining quietly optimistic about the property market as he notes:

• Continued, very low unemployment figures mean a material rise in mortgage arrears is unlikely, despite the higher cost of debt and high inflation (however, it's still likely borrowers will pull back on non-discretionary spending elements)
• There have been no signs of panicked selling or forced sales, despite interest rates rising at the fastest pace since the early 1990s
• The flow of new listings remains substantially below what they would usually be for this time of the year

The RBA’s next monthly cash rate announcement - which will be the last such announcement for 2022 - will be on Tuesday, December 6 at 2.30pm AEDT.