‘A cruel blow’: Grim warning ahead of August interest rate call

Interest rates are likely to remain on hold in August, but experts warn the relief may only be temporary for millions of mortgage holders.

The cash rate sits at 4.35 per cent, with the Reserve Bank of Australia meeting on Tuesday to make their latest decision on whether to raise or hold the cash rate.

There have already been three hikes this year, but it remained steady in the last meeting in June.

In a Finder survey of 38 economists, 35 of them believed the cash rate would remain unchanged once again.

A slight fall in inflation, as well as a softening of the job market, are cited as reasons the RBA should keep the cash rate steady.

“The latest inflation numbers came in a bit lower than expected, the labour market appears to be gradually softening and the housing market is weakening,” Matthew Greenwood-Nimmo from the University of Melbourne said.

Scott Kuru from Freedom Property Investors said the impacts from the earlier rate hikes had flowed through into the broader economy, claiming you would have to “live under a rock” not to see the impact.

“They’ve slowed the housing market – particularly at the Top End of Town – and generally made life harder for Aussies with a mortgage in a cost of living crisis,” he said.

“A rate rise in August would be a cruel blow.”

While this will be welcome news to Aussies suffering in the current cost-of-living crisis, experts admit the chances of further rate hikes this year still remain high.

Almost half of the experts surveyed admitted they thought rates would rise at least once before the end of 2026.

Overall inflation, currently sitting at 3.8 per cent, still sits above the RBA target band of two to three per cent.

“The latest inflation data gives space for the RBA to hold at this meeting. But the next direction is uncertain and could be up,” James Morley from the University of Sydney admitted.

Money and home loans expert at Finder, Richard Whitten, warned that homeowners needed to be careful for the rest of the year, even if rates hold next week.

“With almost half our panel still forecasting one more increase this year, borrowers need to stay vigilant,” he said.

“If you’re one of the 38 per cent of homeowners who struggled to pay their mortgage in July, now is the time to act. Negotiating a discount with your bank or switching to a cheaper lender is the fastest way to give yourself a rate cut and save some cash.”

After next week’s meeting, the RBA will meet three more times in 2026, with the final meeting taking place on December 7 or 8.