< img
src =” https://cdn.propertyupdate.com.au/wp-content/uploads/2025/08/ChatGPT-Image-Aug-8-2025-08_25_07-AM-1038×692.png” alt =”” >< img src =" https://propertyupdate.com.au/wp-content/themes/oldpaper/img/keys.svg" alt=" crucial takeaways"/ > Key takeaways The RBA has actually turned more hawkish, with successive rate hikes and strong expectations that the cash rate will rise to around 4.35% by May, reversing earlier cuts.
Greater rates of interest are already lowering loaning capacity and increasing mortgage expenses, putting additional pressure on real estate cost and need.
Inflation stays stubborn, driven by real estate, energy, and structural elements, indicating the RBA may require to tighten even more, increasing the threat of a sharper economic downturn.
As commonly expected, the Reserve Bank of Australia (RBA) hiked rates for the 2nd straight conference, lifting the money rate to 4.1% ( from 3.85% previously).
The consensus across banking sector economic experts and monetary markets is another walking in May, which would totally reverse the 2025 interest rate cuts.
< img src=" https://cdn.propertyupdate.com.au/wp-content/uploads/2023/08/interest-rate2.jpg" alt= "Interest Rate2" width =" 800" height=" 450"/ > This second hike for the year represents a much more hawkish stance from the central bank, given that there has actually not been sufficient time following the February rate rise for any of its effect to appear in main information.
Sentiment around the RBA financial policy meeting moved quickly over the previous two weeks, with public declarations from both Guv Bullock and Deputy Governor Hauser caution of inflationary pressures, tight labour markets and economy broad capacity pressures.
In addition, the impact of higher energy costs as an outcome of the Middle East conflict included even more upside run the risk of to inflation projections.
This led to a fast shift in forecasts from market economists, with each of the big 4 banks’ economics teams anticipating the cash rate to reach 4.35% by May, together with a spike in monetary market pricing.
In the December quarter, the typical size of a new mortgage stood at around $730k.
For a home loan of this size, the complete pass-through of this newest rate hike will increase month-to-month repayments by $117 per month, or $54 per fortnight.
Likewise, this rate increase lowers the loaning capability of potential purchasers.
For a family earning the median earnings applying for a 30-year mortgage at normal market rates of interest, borrowing capability will be reduced by almost $18k after this RBA decision.
Headline inflation increased by 3.8% yoy in January, and the real estate sector stays a key contributor, with the broad housing component increasing by 6.8% yoy.
This showed a 32% yoy boost in electrical energy costs (as the effects of expiring electrical energy rebates drove a big rebound in expenses to families), a 3.9% yoy increase in rents and a 3.5% yoy lift in new home costs.
More broadly, the RBA faces a substantial challenge in controlling the current uptick in inflation, considered that around half of the contribution to heading inflation was driven by administered and indexed prices (which rose by 7.8% yoy in January and are not particularly responsive to modifications in policy rates), despite these parts accounting for around one-quarter of the total CPI basket.
To bring overall inflation back to target, the RBA requires to slow market prices to a much lower rate, which increases the risk of a hard landing for Australia’s economy.
< img src=" https://propertyupdate.com.au/wp-content/themes/oldpaper/img/note.svg" alt=" pencil icon"/ > Note: This tightening up is most likely to continue to cool need in the property sector total however might even more increase competition within the lower quartile property section.
Cotality’s national Home Worth Index increased by 2.1% in the three months to February, but throughout the country, homes in the lower value quartile increased by 3.2%, as purchasers continued to seek cost.
While the future direction of interest rates appears greater, there stays unpredictability as to how high.
Rates in the interbank money futures market last week implied at least one additional hike from the RBA this year, while the outlook from big 4 bank economic experts are consistent in expecting another rate rise in May.
This would totally reverse the rate cuts executed in 2025, returning the money rate to 4.35%.
< img alt="Gerard Burg" src="https://propertyupdate.com.au/wp-content/uploads/2026/02/Gerard-Burg-1-148x148.jpg" height="148" width="148"/ > About Gerard Burg Gerard is the Head of Research Study for Cotality Australia. He is a highly achieved senior economic expert with over twenty years of research experience across a varied variety of specialities