Ever lie in bed running through your mortgage repayments while you wait for the Reserve Bank to make up its mind? You’re not alone… this month’s decision is a good excuse to actually do something about it, rather than just doom-scroll the headlines.
So, what actually happened
In August, RBA Board members made a unanimous call to keep the cash rate on hold at 4.35%. Inflation has cooled from its highs, and property price growth has eased more than expected so on the surface, this sounds like good news for anyone hoping for a rate cut.
However, Governor Michele Bullock was adamant about not closing the door on another hike, flagging underlying inflation is still running hotter than the Bank would like. In her own words, the board only really considered two options this time: hike, or hold. A cut wasn’t on the table. The next call comes on 29 September.
What “hold, but hawkish” actually means
This is the bit that gets lost in the headlines. “On hold” sounds like stability. But when a central bank holds while openly saying it might hike again, that’s not the same as “we’re done, rates are coming down from here.” It’s more like:
“we’re watching, and we’re not ruling anything out.”
Meanwhile, the average Australian household is now spending around 12% of their disposable income servicing debt (of course, this includes the millions of households that have little or no debt). Which means that mortgage repayments relative to household disposable income are creeping back up toward the levels we saw at the 2024 peak. Whilst your repayments might not have moved this month, budgets are still genuinely stretched for a lot of people.
So… should you fix, go variable, or just sit tight?
There’s no one-size-fits-all answer here, and anyone who tells you otherwise is probably trying to sell you something. But here’s a genuinely useful way to think about it:
If you’re the kind of person who is laying awake at night worrying about what the RBA might do next month (and you’re checking your banking app more than you’d like to admit), a fixed rate can be worth considering. Not because it guarantees you’ll save money (it might not), but because it locks in certainty. You’re paying for peace of mind, not betting on a discount.
The trade-off is the usual one: less flexibility, potential break costs if your circumstances change, and if rates do eventually fall, you won’t get the benefit until your fixed term ends. It’s a genuine trade, not a free lunch which is exactly why it comes down to how much the uncertainty is actually costing you in stress, versus dollars.
If rate movements don’t keep you up at night and you’ve got a cash buffer or some savings built up, staying variable and keeping an eye on things is a perfectly reasonable choice too.
The buffer habit worth building now
Here’s the genuinely good news: a lot of borrowers used the low-rate years wisely, have borrowed (and are) living within their means, and still have around a year’s worth of repayments sitting in an offset account or available via redraw. That buffer is exactly what gets people through a period like this without real stress.
If you don’t have a savings buffer yet, this is a good moment to start building one. Even a small, automatic top-up to saving (or offset) each pay cycle adds up faster than you’d think.
The bottom line
Rates staying on hold is good news, but “no change” doesn’t mean “no action required.”
Action could look like:
- having a conversation with us about whether fixing in part of your loan makes sense right now;
- talking to your partner about ways you could build up a cash buffer together; or
- simply check-in with us to confirm your rate is still competitive.
Now is a sensible time to do at least one of these things, so you’re not caught off guard.
