Key takeaways
The RBA has held the cash rate at 4.35% following its August meeting.
A hold means borrowers avoid the impact of a potential fourth rate rise so far in 2026.
Interest rates remain elevated, continuing to affect borrowing power and affordability for many Australians.
Understanding your options may be more valuable than trying to predict the RBA's next move.
The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 4.35% at its August meeting.
The decision follows three consecutive rate rises earlier this year and comes after the latest CPI figures showed inflation had continued to ease, although underlying inflation remains above the RBA's target range.
While a hold does not reduce borrowing costs, it may provide borrowers with greater certainty as they review their finances and consider their next move.
For borrowers, refinancers, and prospective buyers, the focus may now shift from what the RBA has done to what choices are available in today's market.
Why did the RBA hold in August?
Inflation remains above target
The June quarter CPI showed inflation continued to ease, although underlying inflation remains above the RBA's 2-3% target range. The RBA may have concluded there was enough progress to leave rates unchanged while continuing to monitor incoming data.
Previous rate rises are still flowing through the economy
Following three consecutive rate rises earlier this year, the RBA may have decided to allow more time for those increases to continue flowing through the economy.
Labour market conditions have softened
Labour market conditions have softened compared with earlier in the year, which may have supported the case for leaving rates unchanged while assessing broader economic conditions.
Global uncertainty remains
Global developments, including ongoing geopolitical tensions and higher energy prices, continue to create uncertainty around the inflation outlook. The RBA may have considered these risks alongside domestic economic conditions when deciding to leave rates unchanged.
Uncertainty remains
The outlook for inflation, employment and economic activity remains uncertain, which may have contributed to the decision to leave rates unchanged for now.
What a rate hold could mean for your repayments
If the RBA holds rates and lenders keep variable home loan rates unchanged, borrowers may avoid the additional repayment costs that could have resulted from a rate rise.
However, remaining on an average variable rate may mean missing out on potential savings if a lower rate is available.
Example loan amount | Estimated missed annual savings* |
|---|---|
$700,000 | ~$1,355 |
$1,000,000 | ~$1,936 |
$1,500,000 | ~$2,904 |
*Example calculations only. Based on a 30-year principal and interest owner-occupier loan assuming an average owner-occupier variable interest rate of 6.21% p.a. compared with a rate 0.25 percentage points lower.
What a rate hold could mean for borrowing power
Higher interest rates continue to affect how much many Australians can borrow. However, a hold means borrowing power is generally preserved compared with a further rate rise.
For example, based on standard serviceability buffers, a borrower with an estimated borrowing capacity of $1,000,000 would generally see that borrowing capacity remain steady while rates are unchanged.*
*Indicative example only. Actual borrowing capacity depends on lender policies and individual circumstances.
What a rate hold could mean for you
Interest rate pauses can affect borrowers differently depending on where they are on their property journey. Here are a few things different borrowers may want to consider.
Borrower type | What a hold could mean |
|---|---|
First home buyers | • Borrowing power may stabilise, helping you better understand your position. |
Investors | • Stable rates may provide more clarity when reviewing cash flow and investment decisions. |
Refinancers | • Even if rates hold, your lender may not offer the most competitive rate available. |
What choices could you make now?
A hold may provide some breathing room, but many borrowers are still dealing with higher repayments, reduced borrowing power and ongoing cost-of-living pressures.
Cameron Kusher, independent economist, said the current market may also give many buyers more time to consider their options.
"There generally isn't much of a rush to make a decision at the moment. There's a lot of stock and not a huge amount of competition."
For borrowers considering their next move, this could be a good time to:
Review your current interest rate and home loan features
Compare refinancing options
Reassess your borrowing capacity before making property decisions
Check whether your budget could accommodate future rate movements
Speak with an Aussie Broker about strategies that may suit your circumstances
While today's decision may provide some reassurance, reviewing your options now can help you make informed decisions with greater confidence.
A rate hold doesn't mean your options are on hold
While a hold may come as welcome news for borrowers after three consecutive rate rises earlier in the year, interest rates remain elevated and affordability continues to be a challenge for many Australians.
Lenders may still adjust their home loan rates independently, so reviewing your current loan and comparing what's available across the market could be worthwhile.
Kusher said inflation remains one of the key indicators borrowers should continue watching after today's decision.
"Inflation is obviously the really big one to keep an eye on because that's going to determine what happens with interest rates."
If you're following future RBA decisions, interest rate forecasts and lender movements, our Interest Rate Tracker provides regular updates to help you stay informed.
Whether you're buying, refinancing or reviewing your current loan, an Aussie Broker can help you understand your borrowing power, compare loan options, and make informed decisions based on your goals.