The RBA pause won't last long
The Reserve Bank of Australia (RBA) held rates steady this month, holding off on the cut many were expecting. It may not have been the news mortgage holders were hoping for, but something else is quietly shifting. Inflation is continuing to cool, unemployment is creeping higher, and the RBA is now balancing more than just rising prices. With signs pointing to a softer economy ahead, rate relief could be closer than many think. So what does this all mean for borrowers, for the property market, and for what happens next?
What’s driving the RBA's thinking?
While we don’t know which of the 9 RBA board members voted for a rate pause, we do know that we’re a small step closer to a rate cut. Unemployment has risen marginally to 4.3 per cent, the highest it has been in over three years, according to the Australian Bureau of Statistics (ABS). This was slightly above the RBA’s expectations and a key data point that they are looking at when it comes to driving rate decisions.
All eyes will now turn to the ABS's quarterly inflation data due out on 30 July. If inflation data comes in at 2 to 3 per cent, as markets expect, economists believe it will be the reassurance that the RBA was waiting on, to cut rates.
RBA Governor Michelle Bullock conveyed in the July 2025 statement that the most recent decision was about timing rather than direction, stating the Board was comfortable waiting a few more weeks to ensure the economy remains on track to meet both its inflation and employment goals. Despite global uncertainty, the RBA has one data point here supporting a rate cut with the recent employment data. Borrowers hope the additional inflation data is enough for the RBA to support a rate cut in August.
What does this mean for your mortgage?
A cut may not have arrived this month, but it is likely not far off. That said, the RBA will continue to tread carefully. Any rate cuts will be measured and likely spaced out. If you are reviewing your home loan or considering fixing your rate, this could be a good time to stay patient, to stay flexible, and perhaps stick to variable repayment types. Most economists, as we've made clear in last month's update, while not accurate on this month's rate cut decision, do see at least 2 to 3 cuts in the next 6-12 months. Nonetheless, we are seeing some competitive fixed rates for 1 year of 5.29 per cent or 2 year of 5.19 per cent for principal and interest, owner occupied loans.
Property remains steady
Even with the rate pause, the housing market is holding firm. Buyers are active, auctions are strong, and values are still edging up. Many borrowers are clearly betting on lower rates in the near future.
Over the June quarter, national dwelling values rose 1.4 per cent. Over the full financial year, they climbed 3.4 per cent. Brisbane, Perth and Adelaide reached new highs, while Melbourne still trails its peak. Sales volumes are rising which suggests confidence remains steady.
NSW pushes forward on housing
While interest rate speculation continues, the New South Wales Government is taking real steps to improve housing supply. Their focus is on getting more homes approved and built faster. For larger developments, new rules allow projects to bypass councils with the state’s Housing Delivery Authority. The $1.8 billion Kings Bay Village in Five Dock, which includes 1,200 homes, is a standout example of this approach.
For smaller builds, the new Housing Pattern Book, launched on 16 July, offers architects a guide to low-rise housing options such as terraces, townhouses and manor homes. These will be eligible for ten-day approvals under a faster, complying and development pathway. Premier Chris Minns said the Pattern Book will surpass many councils' ability to block new housing. It is a clear signal that cutting delays and boosting supply are front and centre.
More homes, more choice
More than 6,400 homes have already been approved under these new planning pathways. With construction set to begin soon, the changes could offer real improvements in key locations. For buyers and renters, that may mean more choice and, over time, better affordability in sought-after suburbs.
This fresh approach from the state may not fix supply shortages overnight, but it is a meaningful step in the right direction.
Final thoughts
There is still plenty of uncertainty in the broader economy, but one thing is clear the tide is beginning to turn. Inflation is easing, the job market is softening, and the RBA is slowly shifting its stance. There were 6 in favour of a rate pause and 3 against for the July RBA decision, so we're on the right path here for more rate cuts. If the inflation data at the end of the month is in the range, we should see the majority vote swing to a rate cut and hopefully another follows in quick succession after that. Whether you are planning your next move, reviewing your loan, or just trying to stay one step ahead, feel free to reach out.