The Reserve Bank of Australia (RBA) surprised us by holding the cash rate steady in July, defying strong market expectations of a cut. With most major banks now forecasting a likely rate reduction in August, what does this mean for homeowners and investors? Let’s unpack the key takeaways and how you can prepare for the months ahead.
Key Takeaways for Homeowners and Investors
The RBA’s July rate hold may appear to hit pause, but its impact on homeowners and investors is still unfolding. Here’s what you need to know.
For Homeowners & Borrowers
- No Immediate Relief: The hold means borrowers won’t see their monthly repayments drop just yet. Many households were hoping for some breathing space, but for now, budgets remain tight.
- Time to Act: Even without a rate cut, it’s worth reviewing your home loan. Some lenders are still offering sharper rates to retain customers, and refinancing could save thousands in interest over the next year.
- Prepare for Cuts: A likely August rate cut could reduce repayments by around $80–$160 per month on a $500k–$1m loan. Homeowners can use this window to get ahead by maintaining current repayment levels and paying down principal faster.
For Buyers and Investors
- Opportunity Window: The rate hold has slowed the urgency in the market slightly, giving buyers and investors a brief chance to act before competition heats up again.
- Borrowing Capacity Set to Rise: When rates do come down—potentially from August—borrowing power will increase, allowing buyers to stretch their budgets. This could drive up demand and fuel further property price growth.
- Investor Sentiment Rebound: Although consumer confidence dipped after the hold, expectations of multiple cuts by year-end are likely to reignite property activity.
What the Big Banks and Economists Expect
Following the RBA’s cautious approach in July, here’s what the major players see happening next.
- CBA predicts a 0.25% cut in August and another in November, taking the cash rate to 3.35% by the end of 2025.
- Westpac forecasts a 0.25% cut in August and November, and another in February, taking the cash rate to 3.10% by the beginning of 2026.
- AMP’s Chief Economist Dr Shane Oliver forecasts the next rate cut in August, followed by further reductions in November, February, and May, eventually bringing the cash rate down to around 2.85%.
- Cotality’s Head of Research Eliza Owen describes the likelihood of a rate cut in August as ‘almost certain’ emphasising data such as lower inflation, dull retail sales, and weak GDP per capita growth, supporting the move.
What You Can Do Now
- Review your loan - contact your lender or broker to check if you’re on a competitive rate.
- Plan ahead - investors should consider borrowing strategies around projected lower rates.
- Stay informed - July’s CPI and the RBA’s 12 August meeting will signal future rate cuts.
Final Thoughts
July’s pause may feel like a delay, but it’s also an opportunity to get ahead. With rate cuts likely to begin in August, proactive homeowners and investors could benefit from renewed confidence and market activity in the months ahead.
Are you ready for the next move? Whether you’re reviewing your current home loan or exploring your investment options, we can help you make the most of the upcoming rate cuts. Book a free loan health check with Raiti Finance today and see how we can help secure you a sharper deal.
