Melbourne mortgage holders received relief of sorts today after the RBA left its benchmark cash rate unchanged at 4.35%.
The RBA took a circumspect approach after three hikes in as many meetings have taken a financial toll on many borrowers this year.
However, rate rises are still on the cards as continuing above-target inflation figures put pressure on the RBA.
‘The latest data show that headline and underlying inflation are still too high,’ said the RBA after today’s unanimous policy decision.
It 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, what’s clear is that the RBA will do what it takes to avoid inflation becoming embedded into the economy.
Right now, headline inflation has eased to 4.2% in the year to April, down from 4.6%.
That’s the good news.
However, underlying inflation, which the RBA looks at very closely, edged up from 3.3% to 3.4%.
Both metrics remain above the RBA’s 2%–3% target band, which leaves open the possibility of further rate rises, as the Reserve Bank alluded to in its statement.
The RBA confirmed that the Board remains focused on ‘ensuring that inflation does not become embedded once the impulse from higher oil prices has passed through.’
At the same time, households are under pressure from the cost of living. After increases in February, March and May, the official cash rate has surged from 3.60% to 4.35% this year.
For some mortgage holders, that has meant paying around $270 more a month on a $600,000 loan.
Following the May cash rate rise, NAB was the first of the major banks to raise fixed home loan rates.
However, the flip side is that borrowers continue to benefit from strong competition, with 11 lenders lowering at least one variable home loan rate for new customers, according to the latest data.
Offering a sliver of hope, NAB’s economists now believe the peak of this rate hike cycle has hit its ceiling, with the RBA to cut its rates in Q2 2027 (that’s near the end of this year for normal people).
Others forecast another rate rise in August. Which, given the RBA’s warning today, should not be discounted.
We shall see.
It’s incredible to think that at the start of 2026, some were speculating an RBA rate of 3.10% this year. Since then, there have been dire straits.
If we see a drop in the official cash rate, you can find out more in our recently published article on preparing for a rate cut.
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne. We are one of the most positively reviewed mortgage brokers in Melbourne.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household costs.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!