The Reserve Bank of Australia (RBA) has made its latest decision.
For the second meeting in a row, the nation's central bank has left the official cash rate (OCR) parked at 4.35%, while also keeping the possibility of future rate hikes on the table.
"I understand this is a hard period for some households. High inflation hurts all Australians, especially the most vulnerable," RBA Governor Michele Bullock told reporters in a press conference, following the announcement. "That is why bringing inflation down is our priority."
But she added: "The board will raise rates further if that is what is required to bring inflation down in a timely way. In waiting, the board isn't ruling out that there might be a need for further interest rate rises if we look like we're off a path, which takes us within inflation above the target."
The RBA has repeatedly made it clear that getting inflation back within its target range of 2% to 3% is a top priority, something which the board forecasts will come by the end of 2027. Tuesday's decision was driven by the RBA’s desire to give previous rate increases more time to work their way through the economy, and to see whether they are finally taking some of the heat out of inflation.
"The main game for us is excess capacity, tight labor market, particularly in some areas like construction, the Middle East conflict, [and] the AI boom," Bullock said during Tuesday evening's press conference. "These are all things that are front of mind in terms of risk to the inflation outlook."
While the latest consumer price index (CPI) offered a glimmer of relief, inflation is still running hotter than the central bank would like Down Under.
Headline CPI came in at 3.8% in June, higher than the target band, while trimmed mean was 3.6% during the same 12-month period.
Australian Broker rounded up market players for their thoughts on the RBA's latest move, and what it means for the nation's loan and housing markets.
Chief executive officer of the Mortgage & Finance Association of Australia (MFAA)
"Greater stability around the interest rate outlook can give households, investors and businesses a firmer basis on which to make financial decisions that may have been put on hold. The decision provided an important degree of certainty in an economic environment where Australians continue to navigate cost-of-living pressures, changing economic conditions and broader uncertainty. Certainty matters when people are making significant financial decisions. We have seen households, investors and businesses taking a more cautious approach as they consider the direction of interest rates, the economic outlook and the broader policy environment.
The decision provides greater stability around one important part of that picture and may give people who have been holding off on borrowing or investment decisions greater confidence to reassess their plans. For some Australians, the right decision may be to buy, refinance or invest. For others, it may be to wait. What matters is having the information and confidence to make a decision that is right for your individual circumstances. This is where mortgage and finance brokers play such an important role. Their value is not simply about finding a competitive rate. Brokers help their clients understand their options, assess borrowing capacity and navigate increasingly complex financial decisions."
Executive director at aggregator group Connective
"Today's hold decision will be welcomed by borrowers. But many households remain under pressure even with the pause in rates. Higher borrowing costs and ongoing cost-of-living challenges mean many Australians will likely still be carefully managing household budgets. Across our broker network, we're seeing borrowers come to terms with the reality that interest rates could remain elevated for some time. That uncertainty continues to weigh on confidence, with consumer sentiment remaining among the weakest levels seen in the past 50 years. Many are focused on how they can adapt to a higher-rate environment over the longer term.
That caution is also flowing through to broader housing market activity. Confidence remains subdued, with many buyers taking more time to make decisions as they weigh up the outlook for interest rates and property values, while some sellers are choosing to hold off listing until conditions improve. We’re seeing brokers step up to support clients through this prolonged period of uncertainty. Rather than waiting for market conditions to change, they're helping clients manage cash flow, review lending arrangements, structure debt effectively and plan ahead with confidence."
Consumer finance expert and brand ambassador at comparison platform Zyft
"Homeowners might be breathing a sigh of relief that rates haven’t gone up again. But there’s not much to celebrate. Rates remain at their equal-highest level since 2011, and after three rises already this year, households are still feeling the squeeze. Someone with a $600,000 mortgage is paying around $272 more a month, or $3,265 over the next year, and the banks aren’t expecting meaningful relief until 2027."
Chief executive officer of Mortgage Choice
"The RBA’s rate pause makes sense, following the softer inflation data. That said, inflation remains sticky enough that the possibility of another cash rate rise this year can't be ruled out. For borrowers, this hold shouldn’t mean standing still, especially when it comes to your home loan. It’s a good opportunity for borrowers to reassess their home loan. Our data shows that borrowers are already using this time to make sure their loan is the best for their current circumstances. Around one in three Mortgage Choice home loan submissions in July were for refinancing."
Senior economist at REA Group
"Inflation remains too high, and the RBA is focused on getting underlying inflation back inside its target band. That means there’s still a chance we could see another rate hike later this year.
Home prices and housing market conditions are expected to remain soft over the back half of this year, as the effect of the three hikes earlier in the year and the tax changes in the budget, continue to flow through. But we’re likely to see a turning point late this year or early next, as the cash rate stabilises and the uncertainty from the budget washes out."
Senior lecturer at the University of Sydney's School of Economics
"Prior to the RBA’s announcement, interest rates are already high, and this is proving tough for existing and potential homeowners. RBA decisions, particularly rate increases, can have a substantial impact on first-time homebuyers looking to get their foot on the housing ladder. Higher interest rates make it harder to get a mortgage from a bank and raise the cost of servicing if you can get a loan. Tighter monetary policy also reduces household incomes, which can reduce savings that households might have used for a home deposit. Lower house prices provide some relief, but it’s often not enough to help hopeful homebuyers. Young people are especially hard hit by these effects. And there are many quirks of Australian housing and mortgage markets that can make things worse.”
Chief executive officer of the Finance Brokers Association of Australasia (FBAA)
"When reviewing interest rates, the RBA must consider the real world, and in the real world people are hurting and mortgage stress is rising."
Chief executive officer at aggregator group Finsure
"Despite the RBA's decision to spare mortgage holders from a rate hike this month, I don’t expect the central bank's actions to have a material impact on the property market in the near term. At Finsure, we’ve certainly seen some softening in investor demand, with the decline particularly concentrated in established-property purchases. But this isn’t unexpected given the broader policy environment, including Labor’s changes to negative gearing, which directs concessions towards newly-built residential properties. What’s particularly interesting, however, is that refinancing activity remains very active and resilient despite three upwards movements in interest rates from the RBA this year. We’re also seeing an increase in investment construction. To me, that suggests we’re not seeing a broad-based deterioration in borrower demand across the Finsure network. Rather, we’re seeing that the budget is beginning to influence where borrowers direct their capital, rather than reducing their appetite to use brokers. It’s a shift in the mix, but certainly not a collapse in demand.”
Senior lecturer at RMIT's School of Property, Construction and Project Management
"This rate decision comes as auction clearance rates improve from their recent lows. However, clearance rates need to improve further to be reflective of a balanced market and the spring selling season will be a good test. While there has been clearance rate improvement, the number of properties going to auction is less than this time last year for all capital cities.
These are significant policy shifts occurring against a backdrop of higher inflation and global uncertainty. The blunt tool of monetary policy can deliver sharp hip‑pocket pain, and underlying inflation still exceeds the RBA’s two to three per cent target band.”
Economist at accounting software company Xero Blog
"Small business owners were already starting to see the impact of previous rate hikes on their bottom lines, so the decision from the RBA provides some relief. Holding the interest rate won’t stop expectations of further economic slowing, but it may provide some stability to consumer spending and business confidence, as households and businesses aren't facing another immediate increase in borrowing costs. The decision comes during a tricky period for small businesses, as operational costs continue to rise faster than usual and elevated fuel prices make their way through the economy."
Head of data science for Australia and New Zealand at Experian
"This rate hold may provide some short-term relief for households and businesses. But recent data suggests financial pressure remains uneven across the economy. We are already seeing this across the consumer credit market. Our latest July Business Pulse Monthly shows new mortgage funding increased 18% in the March quarter, compared with the same period last year, while personal loan delinquencies have risen to 3.6% and personal loan hardship has increased to 2.1%. This may suggest financial pressure is emerging unevenly across the consumer credit market, with indicators of repayment stress appearing to increase in personal loans."
Managing director and co-founder at online comparison platform Rateseeker
"This is not the moment to relax and assume the hard part is over. Borrowers who use this pause to review their structure, get ahead of their repayments and plan for multiple scenarios will be better positioned than those who wait for total certainty before acting. That certainty may be a while off yet."
Founder, managing director and mortgage broker at With Finance
"Today's decision confirms what most of the market expected. But that doesn't make it any less welcome. This hold matters for anyone trying to enter the market. First-time homebuyers need borrowing conditions they can actually plan around, not ones that shift every six weeks. Stability like this is what lets people commit to a purchase with confidence."
