The Reserve Bank has left the official cash rate unchanged at 3.85 per cent in its July decision, resisting pressure from weak economic data and market expectations.
Despite slower inflation and subdued retail spending, the RBA signalled it wants firmer evidence, particularly from the June quarter CPI, before making another move.
That leaves mortgage holders and homebuyers waiting until at least August for possible relief.
With rate cuts still on ice, the real estate sector is watching closely. What does this mean for buyer demand, vendor expectations, and stock levels?
We asked several leading agents and industry figures for their take on how this rate pause is shaping sentiment on the ground.
Nerida Conisbee, Ray White Group Chief Economist
The RBA’s decision to keep the cash rate on hold today was likely influenced by President Trump’s decision to extend his 90-day pause on “Liberation Day” tariffs until August 1, says Ray White Group Chief Economist Nerida Conisbee.
“With inflation now at 2.1 per cent and trimmed mean at 2.4 per cent, the RBA appears comfortable that price pressures are under control, while the extended tariff pause provides additional breathing room for monetary policy decisions.
“The extension of Trump’s tariff pause until August 1st gives the RBA more time to assess global trade dynamics before making significant policy adjustments. While Australia’s economic fundamentals remain sound with unemployment steady at 4.1 per cent and GDP growth of 0.2 per cent in the March quarter, the RBA appears content to monitor how the extended pause affects global trade patterns before providing additional stimulus.”
She explains the decision to hold rates comes as Australia’s housing market demonstrates remarkable momentum, with every major market now accelerating.
“Perth’s extraordinary 1.3 per cent monthly growth suggests the market is again building significant steam, while Melbourne and Sydney are showing renewed vigour with 0.5 per cent monthly growth.
With house prices nationally having risen to a median of $941,000 and units to $695,000, the current growth trajectory of 7.0 per cent annually for houses and 5.2 per cent for units appears sustainable despite today’s hold. Markets are still pricing in three rate cuts before year’s end, which means today’s pause may simply be a temporary reprieve rather than a change in direction.”
LJ Hooker Head of Research, Mathew Tiller
A decision by the Reserve Bank of Australia (RBA) to keep interest rates unchanged despite easing inflation is unlikely to impact the property market, according to LJ Hooker’s Head of Research, Mathew Tiller.
He believes uncertainty around US tariffs and the impact on global inflation, along with a strong employment market, led to a cautious response by the RBA.
“Australia’s economic growth has slowed, with consumer spending, business investment and building approvals all weakening, so there is an expectation that a rate cut is around the corner,” Mr Tiller said.
“Until that happens, we will likely see the market continue as it has been for the past few weeks. Listing volumes have remained tight, as many sellers continue to hold back, creating a supply and demand. imbalance that is putting upward pressure on prices.”
He says falling interest rates have already lifted confidence in the housing market, with auction clearance rates strengthening and national dwelling values rising 3.4% over FY25, according to Cotality.
REIQ CEO, Antonia Mercorella
The Real Estate Institute of Queensland (REIQ) says the Reserve Bank of Australia’s (RBA) decision to hold the cash rate steady at 3.85 per cent in July has surprised markets and borrowers, introducing a hot and cold pattern of rate cuts in 2025.
REIQ CEO Antonia Mercorella said after a 25 basis point cut in February to 4.10 per cent, a pause in April, and another 25 basis point cut in May to 3.85 per cent, most had anticipated the easing cycle would continue in July given the sluggish economy and easing inflation.
She said the RBA’s cautious approach may reflect a desire to assess the full impact of the May rate cut before committing to further easing.
“Today’s pause will come as an unexpected and somewhat disappointing move for borrowers and businesses alike – but the RBA is best placed to make the judgment,” Ms Mercorella said.
“Many were expecting a further rate cut in July to support economic activity, especially after a string of soft economic indicators.
“Instead, the RBA appears to be tapping the brakes, potentially to allow earlier cuts to flow through the economy before acting again.”
Despite the July pause, Ms Mercorella said the two rate cuts delivered so far this year are already easing the financial pressure on Queensland households and encouraging more activity in the property market.
HIA Senior Economist, Tom Devitt
“The RBA decision to keep interest rates in restrictive territory today will not stop the improvement in leading indicators of future home building,” said HIA Senior Economist Tom Devitt.
As the RBA held its benchmark cash rate at 3.85 per cent, attention now shifts to its August meeting.
“This decision will leave new home building activity more constrained than necessary, for longer, but the previous two cuts to the cash rate have seen an improvement in market confidence that is likely to continue,” added Mr Devitt.
“Recent inflation data shows that the RBA’s preferred trimmed mean measure has been within their 2-3 per cent target band for over a year now, and continues to decline.
“Household spending has also been constrained, with Australia having been in an almost uninterrupted per capita recession since mid-2022.
“This recent data reinforced the market expectation that the RBA would deliver a cut at their July meeting – an expectation that was disappointed today.
“By most of the RBA’s own estimates, the cash rate remains in restrictive territory, meaning it is still constraining household and business spending across the economy, including in the home building industry.
He said more rate cuts cannot deliver the volume of home building required to achieve the 1.2 million new homes goal and broader policy reforms are required to achieve those building targets.
REA Group Senior Economist, Anne Flaherty
The Reserve Bank surprised markets by holding the cash rate steady at 3.85%, defying widespread expectations of a cut, said Anne Flaherty, REA Group Senior Economist.
“The decision comes despite recent data showing inflation is easing and economic growth is weaker than anticipated.
“While the Reserve Bank made the decision to hold, most forecasters anticipate further cuts to the cash rate before the end of the year.”
She said the decision to hold may slow the pace of price growth seen in the months following the February and May cuts.
“Nationally, prices are up 3.2% since the start of the year, adding around $26,000 to the median price of a home. For many, affordability constraints continue to weigh heavily, as many households grapple with stretched budgets.”
The Agency’s CEO of Real Estate Matt Lahood
By keeping interest rate unchanged at 3.85 per cent at its July meeting, The Agency’s CEO of Real Estate, Matt Lahood, said the RBA is taking a cautious approach as it awaits further confirmation in regards to inflation.
“While some consumers will be disappointed by this decision, which goes against economists predictions, we have seen a solid start to winter with strong participation at auctions and record prices in some markets,” he said.
“We expect to see auction clearance rates remain stable during winter despite this decision, but it will knock some confidence out of the market due to the expectations that were placed upon a rate cut.
He said the RBA next meets on 12 August, just ahead of the Spring selling season, and this will play a key role in sentiment for the months ahead.
REIA President, Leanne Pilkington
The Real Estate Institute of Australia (REIA) says the Reserve Bank of Australia’s (RBA) decision to keep the official cash rate steady at 3.85 per cent, despite widespread market expectation of a change, leaves borrowing costs high just as first home buyers continue to struggle with affordability and housing market activity softens.
REIA President, Leanne Pilkington, said that while holding the rate steady provides some predictability, the latest data indicates first-time buyers are still struggling to enter the market.
“Keeping rates steady offers some stability, but it doesn’t yet ease the financial strain facing many Australians,” Ms Pilkington said.
“We’re seeing reduced activity among first home buyers, which signals broader affordability issues that remain unresolved.”
Ms Pilkington also noted that in May, the RBA Governor indicated a willingness to lower interest rates again if inflationary pressures remain contained.
“We understand the RBA’s priority is returning inflation to its target band, but this needs to be balanced against the risk of further dampening housing demand and locking first home buyers out of the market,” Ms Pilkington said.
“A modest rate cut could help ease mortgage stress without undermining the broader inflation goals.”
“Whilst rental pressures are easing, borrowing costs will need to drop further to provide genuine relief to households,” she said.
If first home buyer activity continues to weaken, she said a rate cut at the RBA’s next meeting would provide much-needed relief for households and help restore confidence in the housing market.
Money.com.au Mortgage Expert, Debbie Hays
Money.com.au’s Mortgage Expert, Debbie Hays, says the RBA’s decision to hold was unexpected.
“It’s not often the Big Four and markets miss the mark – but this time, they all misread the room. In fact, we all did. The RBA clearly wasn’t ready to pull the trigger on another cut. For borrowers, that means no extra breathing room on repayments just yet,” she says.
“Given the elevated uncertainty in both global markets and domestic demand, the RBA is taking a cautious approach – just as Governor Michele Bullock has signalled in the past.
“The RBA is keeping the cash rate on hold to allow more time for data to confirm inflation remains on track, especially with labour market conditions still relatively strong.”
Compare the Market Economic Director, David Koch
Compare the Market Economic Director David Koch said that while today’s decision may be disappointing for mortgage holders, there was hope for borrowers willing to put in some leg work to either negotiate or switch to a better rate.
There can be a 0.50% difference between some of the advertised rates, and your clients could create their own rate cut by shopping around.
“That could represent a saving of $210 on monthly repayments – or $2,520 over a year – for someone with an average $660,000 loan.
“And that’s just looking at rates for new customers, which we know are often much more enticing than the rates available to older customers who have not refinanced in a number of years.”
Russell Gous, Editor-in-Chief of Money Transfer Australia
Though a rate cut was largely anticipated by investors, the RBA’s decision to hold the cash rate steady at 3.85% marks a significant departure from market expectations said Russell Gous, editor-in-chief of Money Transfer Australia.
He said the Aussie dollar was on the back foot over the last week, seeing a fall against Sterling, the Euro, and the Yen. It even slid from its 7-month high against the USD.
However, despite the broader dovish outlook, the decision to hold the cash rate has already seen the AUD find support and begin to rebound against these same currencies.
“While today’s news will likely be less welcomed by borrowers than a cut would have been, the AUD has nonetheless seen some near-term appreciation.”
