While mortgage interest cost (MIC) inflation has historically turned negative during, or after, loosening cycles, we expect it to remain positive this time and rebound from 2026. This is because, in contrast to previous monetary policy cycles, the terminal policy rate is likely to sit far above its pre-cycle low this time. As a result, fixed-rate borrowers will continue to face higher rates when renewing their mortgages, meaning that the average rate on outstanding debt will keep rising after policy rate cuts have concluded.
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