Will RBA Sentiment Impact Your Next Move?

Reserve Bank of Australia Governor Michele Bullock has signaled that persistent inflation risks could compel the central bank to implement another interest rate hike at its upcoming September board meeting.

Speaking at a parliamentary hearing, Bullock noted that while earlier rate increases aimed to guide inflation back to the target band by late 2027, recent economic indicators suggest upside inflation risks are actively materializing. Financial markets have reacted by pricing in an over 80% likelihood of a rate increase this month.

Key Inflation Drivers Identified by the RBA

• Geopolitical Volatility: Ongoing conflict in the Middle East has driven crude oil prices higher (with Brent crude hovering above $104 per barrel), creating direct upward pressure on energy and transportation costs.
• Corporate Cost Pass-Through: With persistent supply disruptions, businesses are increasingly passing sustained cost increases on to retail consumers.
• Global Tech and AI Boom: Stronger-than-expected economic activity in the Asia-Pacific region and the US, driven largely by artificial intelligence investment, is bolstering demand beyond initial central bank projections.

RBA Deputy Governor Andrew Hauser highlighted that international demand linked to the tech sector continues to surprise to the upside, offsetting some of the drag from elevated borrowing costs.

Bullock emphasized that bringing inflation down will likely require a period of slower domestic economic growth, particularly given sluggish productivity. While easing property values across major capital cities may help temper domestic demand, housing prices remain roughly 50% above pre-2020 levels.

What a rate rise could mean for your purchase

A higher cash rate usually flows through to higher mortgage repayments, and it can reduce how much a lender is willing to let you borrow. If you are planning to buy, it is worth confirming your pre-approval with your lender or broker before you start making offers.

The time between exchange and settlement also matters. If rates move during that period, your repayments may change before you have collected the keys.

Tip: Before you sign, ask us about the finance arrangements in your contract. We can explain whether the contract is conditional on finance and what happens if your loan is not approved in time.

What this means if you are selling

Buyers may need longer to secure finance when lending conditions tighten. Allowing a realistic settlement period can help avoid delays and keep your sale moving.

If you are selling one property and buying another, the timing of both settlements becomes even more important. We manage both matters and liaise with your bank and the other parties, so you always know where each one stands.

Note: We are not financial advisers. For advice on borrowing, repayments or the right time to buy, speak with your lender, mortgage broker or financial adviser.

Frequently asked questions

How do interest rate rises affect property buyers?

Rate rises generally increase loan repayments and can reduce your borrowing capacity. Your lender or broker can tell you how a change would affect your own loan.

What happens if my finance is not approved after exchange?

If your contract is unconditional, you may still be required to complete the purchase, and you could be at risk of losing your deposit. That is why it is important to have your finance confirmed, and your contract reviewed, before you exchange.

Should I wait for interest rates to change before buying?

That decision depends on your personal circumstances and is best discussed with a financial adviser or broker. Whenever you decide to buy, we can review the contract quickly so you are ready to act.

Can you help if I am buying and selling at the same time?

We can manage both matters for you and liaise with your bank and the other parties, so the timing of each settlement is clear from the start.