What Did the RBA Decide on 11 August, and Why?
The RBA’s Monetary Policy Board left the cash rate unchanged at 4.35 per cent at its 11 August meeting, a unanimous decision that continued the pause first flagged ahead of the meeting The Adviser. All four major banks now expect no further moves in 2026, with Westpac dropping its earlier forecast of two additional hikes after June’s inflation data came in softer than expected.
Annual headline inflation eased to 3.8 per cent in June, down from 4.0 per cent in May, while the RBA’s preferred trimmed mean measure held at 3.6 per cent, still above the bank’s 2 to 3 per cent target range. Westpac chief economist Luci Ellis said the inflation outcome had been less concerning than the bank and the RBA had feared, pointing to weaker pass-through from Middle East-driven energy costs than expected earlier in the year.
The picture is not entirely one-sided. Employment rose by a stronger than expected 76,000 in June, taking total employment to 14.74 million people, which points to a labour market with more resilience than the inflation numbers alone suggest. ANZ said the combination supported a hold but expects the Board to keep a hawkish bias and preserve the option of raising the cash rate again if inflation fails to keep easing.
For anyone on a variable rate, a hold means repayments stay where they are for now, and the cash rate has moved 0.75 percentage points this year across three hikes rather than four or five. That is a different conversation for a fixed-rate borrower approaching the end of their term, where the rate on offer today reflects where markets think the cash rate is headed, not just where it sits now. Comparing options before a fixed term expires is worth doing with a broker rather than assuming the rate will simply roll over to something similar.
Why Did New Home Loan Commitments Just Post Their Steepest Quarterly Fall in Years?
ABS figures for the June quarter show new dwelling commitments fell 5.4 per cent to 134,225, with the pullback spread across every borrower type The Adviser. Investor lending led the decline, down 8.6 per cent in commitment numbers and 10.2 per cent in value to $37.1 billion, the steepest quarterly fall since September quarter 2022. ABS head of finance statistics Mish Tan said lending conditions shifted through the quarter as the RBA delivered its third rate rise of the year and the federal budget’s negative gearing and capital gains tax changes were announced.
Owner-occupier commitments fell 3.3 per cent to 81,626, with lending value down 1.9 per cent to $60.5 billion, while first home buyer numbers slipped 2.9 per cent to 29,319 even as FHB lending value edged 0.2 per cent higher to $18.4 billion. The investor retreat was concentrated on the east coast: NSW, Victoria and Queensland recorded quarterly falls of 15.5 per cent, 14.2 per cent and 10.1 per cent, while the Northern Territory, ACT and Tasmania all posted gains.
Does a fall in loan commitments mean fewer people are buying property?
Not exactly. Loan commitments count new lending arranged in a quarter, not settled purchases, and the figure can move for reasons beyond buyer numbers alone, including cash purchases, processing timeframes, or fewer investors refinancing. A fall does point to less new borrowing activity overall, but it is one input into the broader market picture rather than a direct headcount of buyers.
More recent figures suggest the slowdown deepened rather than eased after June. Equifax recorded mortgage demand 16.4 per cent lower than a year earlier in July, the fourth straight monthly annual fall, with first home buyer demand down 19.1 per cent. Westpac, CBA and ANZ have each reported similar patterns in their own application data since the May budget, with investor applications down between 26 and 28 per cent at the two majors that broke out the figures.
What Happens Now That the SMSF Property Loan Ban Has Taken Effect?
The federal government’s ban on new limited recourse borrowing arrangements for residential property inside self-managed super funds took effect on 10 August, closing a leveraged pathway that industry data suggests was larger than officials had assumed The Adviser. Existing SMSF property loans and refinances of those arrangements are unaffected, and SMSFs can still buy property outright with fund cash or borrow for qualifying business real property.
The Housing Industry Association warned the change could cut detached home commencements by 3.5 to 5 per cent annually and said roughly 2,500 already-signed new-home contracts were expected to be cancelled because buyers or developers could not complete the paperwork before the deadline. HIA chief economist Tim Reardon argued the ban works against the government’s own target of 1.2 million new homes by 2029, since SMSF lending has historically funded supply rather than added to demand.
Separate figures from the Australian Finance Industry Association suggest the affected market was considerably larger than the government’s working estimate of around 4,000 new arrangements a year: 13 non-bank lenders alone wrote more than 16,000 new SMSF residential loans in the 2026 financial year, backed by $10.3 billion in security. Non-bank lender Firstmac said about 20 per cent of its SMSF lending, roughly 1,500 loans a year, went to new developments and off-the-plan purchases.
For SMSF trustees who already exchanged contracts before 10 August, transitional arrangements should still apply, though the detail varies by lender and by fund. Anyone reviewing an existing SMSF property strategy, or weighing SMSF lending under the new rules, is dealing with a genuinely complex intersection of superannuation and lending law, and that is worth working through directly with an accountant, financial adviser or broker rather than relying on general commentary.
Which Capital Cities Have the Biggest Buffer Against a Deeper Price Correction?
New modelling from Cotality shows the cities that boomed hardest over the past five years have the most room to fall before losing those gains, while cities with flatter growth have far less cushion The Adviser. Perth has the largest buffer of any capital: even a 20 per cent fall from its peak would only take values back to around April 2025 levels, after what Cotality described as the strongest recent growth cycle of any capital city.
Brisbane and Adelaide sit in a similar position. A 20 per cent fall would return Brisbane to roughly its August 2024 levels and Adelaide to around April 2024 levels, despite Brisbane having entered its own downturn only two months ago. Melbourne is the outlier: Cotality head of research Gerard Burg said the city’s comparatively flat growth over the past five years means a decline beyond 10 per cent from its November 2025 peak of $840,000 would push values back to pre-pandemic levels.
Sydney sits in between. Although values are already more than 5 per cent below their peak, Cotality’s modelling shows a full 20 per cent downturn would only return Sydney to around May 2021 levels, reflecting how much the market gained through the pandemic-era upswing. Burg said the same percentage fall does not carry the same weight everywhere, and that buyers and sellers weighing a purchase or sale need to look at a market’s own growth history rather than a single national figure.
Key Takeaways
- •The RBA held the cash rate at 4.35 per cent on 11 August, and all four major banks now expect no further moves in 2026.
- •New home loan commitments fell 5.4 per cent in the June quarter, with investor lending down 8.6 per cent, its steepest quarterly fall in almost four years.
- •Mortgage demand was 16.4 per cent lower than a year earlier in July, the fourth straight monthly annual fall recorded by Equifax.
- •The SMSF property loan ban took effect on 10 August, and the Housing Industry Association expects it to cut detached home commencements by 3.5 to 5 per cent a year.
- •More than 16,000 SMSF residential loans were written in the 2026 financial year, well above the government’s working estimate of around 4,000 a year.
- •Perth, Brisbane and Adelaide have the biggest buffers against a deeper price correction, while Melbourne’s thinner five-year gains leave it more exposed.