Sydney’s mortgage borrowers have avoided another hit to repayment costs after the RBA left its cash rate unchanged at 4.35%.
Fresh from hiking the rate in February, March and May, Martin Place opted to hold off on a fourth increase in 2026 following today’s unanimous decision by the board.
The reason?
‘The latest data show that headline and underlying inflation are still too high,’ said the RBA. The Central Bank added that it will do what it considers necessary ‘to achieve price stability and full employment, including increasing the cash rate target further if required.’
So, while today’s pause will be appreciated by many mortgage holders, clearly further rate hikes are still in the conversation at Martin Place.
RBA board member Ian Harper even said recently that persistent inflation remains a ‘significant issue’. As it stands, both headline and underlying rates of inflation are above the 2–3% target. In fact, inflation has been above the RBA’s preferred band since the September quarter of 2025.
The good news – well, sort of – is that headline inflation is down from 4.6% to 4.2% for the year to April. However, the underlying rate – which is looked at closely by the RBA – ticked up slightly from 3.3% to 3.4%.
And with the current ceasefire just holding in the Middle East, there’s some cautious optimism.
After a triple hit of hikes this year – taking the RBA rate from 3.60% to 4.35% – some economists believe the rate could end up at around 5% by year’s end. Ouch. The RBA expanded on this further today, saying that ‘global oil supply issues will take some time to resolve, maintaining upward pressure on global energy prices and inflation. ‘Higher fuel prices have added directly to inflation … so inflation is likely to remain high for some time.’
On the lenders’ side, AMP Head of Investment Strategy and Chief Economist Shane Oliver said earlier this month that variable mortgage rates of 5.7% to 6.4% and fixed rates of 5.8%–6.6% reflect market expectations of one further RBA rate rise.
And while NAB became the first major lender to lift fixed mortgage rates after the May cash rate increase, competition in the home loan market is also good news.
Eleven lenders reduced at least one variable rate for new customers as they sought to attract new business, according to the latest data.
If you are considering reviewing your current arrangements, reach out to Mortgage Broker Sydney. Our friendly brokers can meet you wherever is most convenient: your home, office, or a local cafe.
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.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!