June Cash Rate: A Look at What’s Happening in the Australian Market

The Reserve Bank of Australia (RBA) has decided to hold the official cash rate steady at 4.35% following its June 2026 meeting. This marks the first hold of the year after three consecutive 0.25% hikes earlier in 2026 (February, March, and May), bringing the rate up from 3.60%.

This pause provides some welcome stability for Australian homeowners, borrowers, and the broader property market after a period of tightening.

Impact of the Higher Cash Rate So Far

The cumulative 0.75% increase this year has had noticeable effects:

• Homeowners: The average borrower is now paying around $335 more per month on their mortgage repayments.
• Borrowing Capacity: Prospective buyers have seen their borrowing power reduced. For example, someone earning $120k annually may have lost over $40k in borrowing capacity.

These pressures have contributed to a slowdown in the property market, with softer price growth and longer times on market in many areas.

Federal Budget Changes Add Pressure

The May 2026 Federal Budget introduced significant shifts, particularly affecting investors:

• Proposal to eliminate negative gearing for properties purchased after 12 May 2026.
• Changes to capital gains tax.
• Lenders are increasingly removing negative gearing considerations from serviceability assessments, leading to borrowing capacity drops of around 20% for investors.

Loan Market data shows a 27% decrease in investor loan applications since the budget announcement, as investors reassess their strategies.

First-Home Buyers

First-home buyers have also felt the pinch from reduced borrowing capacity due to higher rates. A $120k earner’s potential loan amount on a 30-year term has dropped from around $644k to $601k (figures vary by lender and individual circumstances).

Market Competition and Opportunities

With fewer investors active and reduced buyer inspections:

• Ray White data indicates open homes in May averaged just 2.43 attendees, down from 4.32 in January.

This cooling could create opportunities for buyers—whether first-home buyers, upgraders, or those looking for investments—who are well-prepared. Speaking to a mortgage broker is highly recommended to understand your personal borrowing power and options in the current environment.

What’s Next for Rates?

Markets and economists widely expected the June hold, with financial conditions now tighter and signs of slowing economic activity (e.g., mixed labour market data, cooling consumer spending). However, inflation remains a concern due to global factors like elevated fuel and commodity prices. The RBA will continue to monitor data closely, with the next decision due in August 2026.

Key Takeaway

The RBA’s decision to hold at 4.35% brings a period of relative stability after recent hikes and policy changes. While challenges remain—especially for highly leveraged buyers and investors—the current environment may suit prepared buyers looking for reduced competition.

For personalised advice on how these changes affect your borrowing capacity or mortgage options, consult us. Market conditions can shift quickly, and professional guidance is essential.

Published: June 2026

Sources include RBA announcements, Loan Market insights, and market data.