Sydney mortgage holders were given a reprieve today after the RBA left its official cash rate unchanged at 4.35%.
Today’s hold reflects the RBA’s wait-and-see approach as inflation eases slightly.
‘While the impact of the Middle East conflict on inflation has so far been less than expected, headline inflation is still too high,’ said the RBA today.
‘Trimmed mean inflation also remains elevated and is little changed from the March quarter.
“The disruption to global oil supply is adding directly to inflation and there are indications that higher fuel prices are being passed through to prices of other goods and services, so inflation is likely to remain high for some time,’ added the Central Bank after its unanimous vote.
The statement underlined that inflation is still too high, and that ‘it is not expected to return to around the midpoint of the target range until late 2027’.
So, there’s scope for rate rises over the next year by the RBA, according to its projected timeline.
Today’s board decision comes after the latest CPI data showed a slowing in headline inflation, which was 3.8% for the year to June, down from 4.0% in May.
Meanwhile, the underlying rate – which strips out volatile items and is looked at closely by the RBA – remained steady at 3.6% for June.
At the same, borrowers who have faced three official rate increases this year are now seeing competition among lenders – and it’s providing welcome relief.
Canstar reports nearly 50 lenders now offer owner-occupier variable home loan rates below 6.0%.
Bendigo Bank, for example, has joined 15 lenders now offering variable rates below 5.9%.
Despite the growing competition, economists remain divided on the outlook for interest rates.
With inflation still above the RBA’s 2-3% target, another rate rise cannot be ruled out.
However, HSBC chief economist Paul Bloxham expects the RBA to remain on hold for an extended period before beginning to reduce rates around the middle of 2027.
Westpac chief economist Luci Ellis, however, expects another rate increase this year if inflation proves to persistently remain above target.
And some, like EQ Economics’ Warren Hogan believe the rate is not out by one or two hikes, “it is out by at least four”.
For borrowers, today’s pause is welcome news, but it may not signal the end of interest rate uncertainty just yet.
If you are considering reviewing your current arrangements, reach out to Mortgage Broker Sydney.
In addition, we are here to guide you on various strategies such as uncovering lower rates, enhancing savings, consolidating debts, and alleviating the impact of rising household prices.
Marc is a Mortgage Broker based in Melbourne with nearly two decades of experience. In his 18 years mortgage broking he has helped arrange too many loans to count but he still loves his work because he loves saving people time, effort, and money.