RBA interest rates: Reserve Bank holds cash rate at 4.35% as house prices continue to fall
Summary
The Reserve Bank of Australia (RBA) kept the official cash rate steady at 4.35% after three hikes earlier in the year. The RBA warned that house prices are falling across several cities, which will slow income growth and household spending, but said it may raise rates again if inflation remains high.Key Facts
- The RBA held the cash rate at 4.35% following three increases in 2024.
- House prices are falling in Sydney, Melbourne, Brisbane, Perth, and Adelaide.
- Inflation is still above the target at 3.8% yearly, with the goal of reaching 2.5% by late 2027.
- Falling home values are expected to reduce household wealth and spending in 2026.
- New home loans have slowed, with a sharp drop in investor loan commitments and home loan applications.
- Some banks are lowering advertised mortgage rates to compete for customers.
- Most mortgage holders have buffer savings covering around a year of repayments.
- Economic growth is forecast to be about 1.4% in 2026, partly supported by increased datacentre investment.
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