Cash Rate on Hold Again: What Borrowers Should Do Now

The RBA held the cash rate at 4.35% for a second straight month on 11 August 2026 — here's what the pause means for your home loan.

The Reserve Bank of Australia has kept the official cash rate at 4.35 per cent for the second consecutive meeting, confirming what all four major banks and a Reuters poll of 37 economists had unanimously anticipated. The decision by the Monetary Policy Board on 11 August 2026 was unanimous and follows three rate increases delivered between February and May — increases that collectively reversed the 75 basis points of easing the RBA had delivered in 2025.

For millions of Australian mortgage holders, the hold is welcome news. But as industry leaders are making clear, a rate pause is not an invitation to stand still.

What the RBA Actually Said

The board's post-meeting statement left little room for complacency: inflation remains too high, and further increases remain on the table. "Inflation is still too high. It is not expected to return to around the midpoint of the target range until late 2027 and there are upside risks to this projection," the board said.

Governor Michele Bullock was direct at the press conference following the decision. "The board will raise rates further if that is what is required to bring inflation down in a timely way," she said. When reporters asked whether cutting rates had been considered, she confirmed the board had discussed only two options — holding or hiking — and had chosen unanimously to hold.

Headline CPI eased to 3.8 per cent in the year to June, down from 4 per cent in May and below the RBA's own forecast of 4 per cent. The trimmed mean — the RBA's preferred measure of underlying inflation — came in at 3.6 per cent, also below the May forecast of 3.8 per cent. These softer readings gave the board room to pause, but they did not give the all-clear for cuts.

Unemployment remained at 4.4 per cent in June, unchanged from May. The RBA's new forecasts assume the cash rate stays around 4.35 per cent through December 2028, and the bank now projects inflation returning to the 2.5 per cent midpoint of its target band by early 2028. Interbank futures markets were pricing in a 60 per cent probability of at least one further rise by March 2027, while rate cuts are not expected until the second half of 2027 at the earliest, according to major bank forecasts.

What Three Rate Rises Have Cost Borrowers

The cumulative impact of this year's tightening cycle is real and substantial. According to MPA Australia, for a borrower carrying a $600,000 mortgage with 25 years remaining, each 25-basis-point increase adds approximately $92 per month to minimum repayments — meaning the three rises since February have added around $276 per month for that borrower.

Those carrying the average new owner-occupier mortgage — $735,000 in the March quarter — have seen monthly repayments climb by just over $350 since the start of the year, according to Cotality data.

The RBA's own analysis shows Australian households are spending approximately 12 per cent of their disposable income servicing debt, approaching the level seen just before the global financial crisis in 2008. However, the bank also noted that many borrowers used the extended low-rate period to build substantial buffers, with the typical borrower now holding roughly a year's worth of scheduled repayments in offset or redraw accounts.

What the Pause Means for Your Home Loan

The data shows borrowers are already acting on the hold. Anthony Waldron, CEO of Mortgage Choice, noted that around one in three Mortgage Choice home loan submissions in July were for refinancing. "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," Waldron said.

That view is shared across the industry. MFAA CEO Anja Pannek noted that mortgage and finance brokers had facilitated a record 81 per cent of all new residential home loans in the March 2026 quarter. "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," she said.

If you are on a variable rate, now is the moment to check whether your lender's rate reflects the current competitive landscape. Use our refinance savings calculator to estimate what switching could save each month, and browse current refinance home loan options to see what is available.

For those approaching financial difficulty, FBAA CEO Leo Gagic had clear advice: "Be open and honest about your circumstances and contact your lender as early as possible. Don't wait until you have missed a payment." He emphasised that brokers can source solutions that an individual lender cannot, since lenders are limited to their own product range.

For prospective buyers, the spring selling season is just weeks away. With PropTrack data showing home values have softened for four consecutive months and housing supply at multi-year highs, there is more choice and greater negotiating room than at any point in recent years. Use our borrowing power calculator to understand what you can realistically borrow at current rates before the season opens.

The next Monetary Policy Board meeting is scheduled for 28–29 September 2026.

*Source: Australian Broker*