Why the RBA Is Holding Rates Steady: What Buyers Should Know in 2026
Know How & Why RBA Holds Off On Rate Cuts
The Reserve Bank of Australia (RBA) has signalled borrowers should not expect near‑term rate relief. RBA Deputy Governor Andrew Hauser told the ABC the chance of any rate cuts is “very low”. Headline inflation eased modestly – up 3.4% in the year to November (from 3.8% in October), but remains above the RBA’s 2–3% target. Even core (trimmed-mean) inflation is still about 3.2%. The board left the cash rate at 4.35% in December and is widely expected to hold again in February.
Hauser noted the RBA is targeting inflation about 1–2 years ahead. Cuts will only come if inflation falls sustainably toward the target (or if the economy weakens significantly). For now, buyers should reset expectations: rate relief may not arrive until well into 2026 or beyond. In short, the smart play is to focus on property fundamentals (location, value and finance) rather than waiting on interest rates to change.
Key takeaways for buyers
Limited borrowing power: With the cash rate at recent highs and banks enforcing strict lending caps, buyers’ budgets will be constrained. Factor this into your plans and allow some buffer for interest costs. Ask your lender or broker to confirm what you can safely borrow. This may mean setting a more conservative price limit.
High holding costs: Ongoing rates mean mortgage interest and other ownership costs remain elevated. Factor these into your budget when choosing a property – even a small rate rise can add significant dollars to your monthly repayments. For example, a 0.5% rise on a $500K loan adds roughly $100 more each month.
Strong competition: Demand – especially at the affordable end – is still firm. Government schemes have helped first-home buyers enter the market, so prices aren’t likely to fall just because rates stay flat. Focus on finding value in each suburb rather than waiting for a big rate-driven correction.
Market-specific strategy: Different suburbs have different strengths when it comes to negotiating on purchasing property. Use the available data (i.e., recent sales, days on market, etc.) as well as expert opinion and input. This approach will result in providing the best offer. A buyer's agent will assist you in sorting through the many options available to find those properties that are undervalued.
Plan and prepare: Prior to locating a property, complete the financing process. Apply for the proper pre-approval to enable you to act quickly on any property that fits your needs. If you are adequately financed, you have the ability to act "fast" when you are interested in purchasing a property. Being ready will typically determine whether or not you are able to purchase a property.
Ready to buy with confidence? Prowealth Properties is your trusted partner in the Australian property market. Our team at Prowealth Properties can guide you through today’s changing market. Our knowledgeable staff are well-versed in the Australian property market and will work to assist you in establishing an appropriate strategy. Call us on +61 433 853 248 or book a free consultation to get started. You can also follow us on LinkedIn and Instagram to keep up with market insights.
