Under the selected assumptions, RBA cash rate up from 3.85 to 4.50 produces the following over 2 years. Budget balance falls by $1.9bn; RBA cash rate rises by 0.64pp; Average outstanding mortgage rate rises by 0.55pp; Average mortgage repayment rises by 4.9%; House prices falls by 4.0%. On the household side, roughly 826k households end up better off in cash terms and 5.5m households worse off, with the remainder largely unaffected. The Modelled Wellbeing Index — a weighted composite of material and security proxies, not a measure of happiness — moves -0.68 points to 58.5.

In the first six months, RBA cash rate rises to +0.65pp; Average outstanding mortgage rate rises to +0.05pp; Average mortgage repayment rises to +0.10%. Then Financial stress index rises to +0.3 pts; First home buyer access falls to −0.2 pts; Investor demand falls to −0.09%. Then House prices falls to −0.18%; Price to income ratio falls to −0.18%; Inflation falls to −0.02pp. Transmission is fastest where a price is administered — interest rates, excise, subsidy rates — and slowest where behaviour has to change.

Between six months and two years, Budget balance falls to −$302.6m; Dwelling approvals falls to −0.70%; Job vacancies falls to −0.55%. Then Underemployment rate rises to +0.23pp; Unemployment rate rises to +0.12pp; Modelled Wellbeing Index falls to −0.6 pts.

The averages hide the distribution. recent buyers with large mortgages lose about $227 a month, while established mortgage holders lose about $185 a month. Meanwhile outright owners approaching retirement gain about $43 a month, and retirees with savings gain about $34 a month. That gap — not the aggregate — is usually what determines whether a policy survives contact with the public.

Two forces work against the headline result. Construction capacity loop: Trying to build more bids up the cost of building, which chokes off part of the increase. The reason a large approvals target delivers less than it promises. Housing supply loop: Higher prices induce building, which adds to the stock, which eventually lowers prices. The loop is real but extremely slow — the dwelling stock moves about 1.5% a year.