RBA Leaves Cash Rate on Hold at 4.35% – What It Means for Borrowers

The Reserve Bank of Australia has left the cash rate on hold at 4.35% at today’s meeting, extending the pause that began in June rather than resuming the tightening cycle it ran through the first half of 2026.

It’s the outcome all four major banks, financial markets, and YBR’s own Property Insights panel had been pointing to heading into today’s 2:30pm announcement.

“Bottom line, maybe tightening, more than likely no tightening, no change at all. But if we’re looking for the future, don’t expect a rate reduction in the near term.” – Mark Bouris, Property Insights, recorded ahead of today’s decision

Why the RBA held

Inflation remains the Board’s central concern, but the latest read gave it just enough room to sit still. The trimmed mean, the RBA’s preferred measure of underlying inflation, is running at 3.6% through the year, with headline inflation at 3.8%. Both are still well above the RBA’s 2 to 3% target band, but the trimmed mean came in a touch softer than markets had expected.

“It was 0.1 lower than expected. It’s nice, but it’s not fixing the problem.” – Stephen Koukoulas, Economist, Property Insights

Koukoulas pointed to a second factor easing pressure on the Board: a labour market that, while still comparatively tight, is showing early signs of loosening. The unemployment rate has been creeping higher and now sits at 4.4%.

“I think on hold. They’ll still say that we don’t like inflation being as high as it is. And so they’ll just be on hold.” – Stephen Koukoulas, Economist, Property Insights

A cooling housing market, particularly in Sydney and Melbourne, has also given the Board room to pause. The RBA doesn’t target house prices directly, but it does watch the flow-through to household wealth, spending and bank balance sheets.

The RBA’s statement

In its post-meeting statement, the Board framed today’s hold as a pause to assess the impact of three earlier hikes, not a sign that inflation pressure has eased. It also pointed to a new source of risk: disruption to global oil supply linked to the Middle East conflict, which it said is adding directly to inflation, with higher fuel prices already being passed through to the price of other goods and services.

“With monetary policy judged to be somewhat restrictive, the Board decided to leave the cash rate target unchanged while it assesses how the economy is evolving. The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise.”

Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 11 August 2026

The Board does not expect inflation to return to around the midpoint of its 2 to 3% target range until late 2027, and flagged upside risks to that timeline. Today’s decision was unanimous. The statement also confirmed trends already showing up in the housing and labour markets: housing prices falling in some capital cities, new housing lending declining noticeably, and labour market conditions easing by a little more than the Board had expected in recent months.

What this means for your repayments

If you’re on a variable rate, today’s hold means no further increase to your minimum monthly repayment. That will come as welcome relief after three consecutive rate rises earlier in 2026, which already added meaningfully to household budgets.

Canstar’s analysis of those three hikes shows just how much they added to monthly repayments across different loan sizes:

Source: Canstar, cited in ‘RBA Leaves Cash Rate on Hold’, ybr.com.au, 16 June 2026. Based on an owner-occupier paying principal and interest with 25 years remaining, at the RBA average existing customer variable rate, assuming banks pass on each hike in full the month after the decision. General information only.

A hold stops that number from growing further this month, but it doesn’t reduce it. Borrowers who haven’t reviewed their loan since those hikes landed are still carrying the full cost of them.

What the housing market looked like going into today

Cotality’s July 2026 Monthly Housing Chart Pack shows a market that has lost momentum since the turn of the year. National dwelling values fell 0.7% over the three months to June, the largest rolling quarterly decline since January 2023, even though values are still up 7.3% over the past year.

The national figure hides a wide split. Combined capital city values fell 1.3% over the June quarter while combined regional values rose 1.1%. Sydney (down 3.2% for the quarter, up just 0.3% annually) and Melbourne (down 2.6% for the quarter, down 0.9% annually) are driving the capital city weakness, while Perth, Brisbane, Adelaide and Darwin remain at or near record highs, up between 11.6% and 23.9% over the year.

Cotality’s daily index, current to 14 July, shows the two largest cities still losing ground: Sydney down 1.3% and Melbourne down 1.2% on a rolling 28-day basis, against a 0.4% gain in Perth.

Buyer demand has cooled alongside values. Auction clearance rates across the combined capitals have fallen from a February peak of around 66% to the low 40s in June. Homes are taking longer to sell, with the national median time on market rising to 32 days, and vendors are discounting harder, with the median vendor discount across the capitals widening to 3.6%.

What comes next

Cotality’s own assessment, published in its July Monthly Housing Chart Pack, is blunt about the road ahead: even if today marks the peak of the cycle, any rate cuts are unlikely until well into 2027. Economist Stephen Koukoulas made a similar point on Property Insights, noting that a cut requires inflation to fall to 2.5% and stay there, not just tick down for a quarter.

For now, borrowers should plan around today’s rate holding for an extended period rather than assume relief is close.

What borrowers should do now

1. Know your current rate. Many borrowers know their repayment amount but not the actual interest rate they’re paying, and that’s the starting point for any comparison.
2. Check when you last reviewed your loan. If it has been more than 12 months, the market has likely moved around you, whatever the RBA does today.
3. Understand your options before you need them. Whether you want to reduce repayments, consolidate debt, access equity or pay your loan down sooner, it helps to know what’s available.

A next step

Whether rates move again this year or not, there are a few practical steps worth taking today:

1. Know your current rate: Many borrowers know their repayment amount, but not the actual interest rate they’re paying. Your current rate is the starting point for any meaningful comparison. 
2. Check when you last reviewed your loan: If it’s been more than 12 months since you reviewed your home loan, there’s a good chance the market has changed around you. Even when rates are on hold, lenders continue to adjust pricing, products and policies.

3. Understand your options before you need them: Whether you’re looking to reduce repayments, consolidate debt, access equity or pay down your loan sooner, understanding your options is a great place to start.

Taking a few minutes to understand where your loan stands today could make a meaningful difference over the life of your mortgage.

If you’d like to see whether your current loan is still competitive, speak to a YBR broker or learn more about your refinancing options, below.