The RBA Won't Budge, Relief Arrives Elsewhere

The Reserve Bank delivered no surprises this week, leaving rates unchanged while making it clear that the inflation fight is far from over. At the same time, a breakthrough peace deal between the US and Iran eased pressure on energy markets, creating a rare piece of good news for consumers facing rising living costs.

What's going on?

The Reserve Bank of Australia (RBA) kept the official cash rate steady at 4.35% during its June meeting. While this pause brings immediate relief to borrowers, the central bank explicitly warned that inflation remains stubbornly high and further rate hikes are still on the table. The RBA highlighted that global energy market volatility and geopolitical tensions are keeping inflation risks skewed to the upside.

Why should I care?

The decision signals that central bankers are deeply worried about sticky domestic prices, meaning anyone hoping for a rate cut before the end of the year will likely be left disappointed. For savers, it means high-interest accounts and term deposits will continue to offer decent yields for a while longer, while property buyers should expect the market to remain cooled and constrained by these high borrowing costs.

(We published a special edition released in response to today's RBA monetary policy announcement)

We published a special edition released in response to today's RBA monetary policy announcement - The Reserve Bank Hold — What It Means for Property Markets.

In this edition, we examine the economic drivers behind the RBA's decision, how higher interest rates are flowing through the financial system via the monetary transmission mechanism, the emerging trends in mortgage lending and refinancing, and what the latest forecasts from Australia's major banks may mean for property values and investment strategy through 2026 and into 2027.

What's going on here?

The US and Iran have reached a breakthrough 14-point memorandum of understanding to end their recent conflict and fully reopen the vital Strait of Hormuz maritime trade route within 30 days. As part of the deal, Washington will release roughly $24 billion in frozen Iranian funds, kicking off a 60-day window to negotiate broader sanctions and nuclear enrichment issues. Global stock markets rallied on the news, while global oil benchmarks sank to their lowest levels since March, with Brent crude dipping into the low US$80s.

Why should I care?

This is both good and bad news for Australians. On the bright side, lower global oil prices mean you should see some welcome relief at the petrol pump over the coming weeks, which will also help lower general shipping and grocery costs. However, the resulting global stock market rally directly boosts your superannuation balances, particularly if you are exposed to international shares. On the flip side, the ASX 200 often moves on the back of major energy and mining stocks, which may face short-term pressure as commodity prices cool down.

What's going on?

The RBA’s latest commentary highlighted a distinct softening in housing demand across the country as buyers grapple with extreme affordability pressures and high interest rates. At the same time, property investors are navigating a shifting landscape of proposed tax adjustments and heightened regulatory scrutiny. While property prices have shown structural resilience due to a lack of supply, the era of rapid capital gains driven by cheap credit is officially on pause.

Why should I care?

If you are an investor using strategies like negative gearing, your math just got harder; higher interest costs mean your out-of-pocket holding costs are up, and you can no longer rely on quick capital growth to bail you out. For renters, the news is tough because developers are pausing new builds and buyers are locked out of purchasing, the rental shortage will likely worsen, keeping upward pressure on your weekly rent. If you are looking to buy your first home, you face less competition from investors, but your offset accounts and borrowing capacity will remain heavily constrained by the RBA’s "higher-for-longer" rate stance.

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