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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The Reserve Bank published the minutes of its 10 and 11 August meeting on Tuesday 25 August, and for anyone with a home loan they say more than the decision did. The Monetary Policy Board voted unanimously to leave the cash rate target at 4.35 per cent. The minutes record that scheduled mortgage payments, as a share of household disposable income, had risen to near their 2024 peak and were expected to rise further, and that demand for new housing loans had declined significantly, particularly from investors.
They also show that a rate increase was on the table. Members considered the case for lifting the cash rate by 25 basis points before settling on a hold, and agreed to stay alert to the risk that inflation proves higher than forecast. The Adviser reported on Wednesday 26 August that two of the major banks read the document as leaving the door open to another rise this year.
Minutes of the Monetary Policy Meeting of the Reserve Bank Board, 10 and 11 August 2026, published 25 August 2026. Underlying inflation is the trimmed mean measure.
What the Board said about home loans
Three passages in the minutes speak directly to borrowers and lenders.
The first is about the weight of repayments. Scheduled payments are the amounts borrowers are required to pay under their loan agreements, interest and principal together. The minutes put them, as a share of all household disposable income, near the peak reached in 2024 and say that share was expected to increase further. A rate rise does not reach every borrower at once: lenders apply it some weeks after the decision, and loans on fixed rates only feel it when the fixed term ends, so the burden keeps rising for a time after the cash rate stops moving.
Related readSuncorp Bank tells 1.2 million customers their banking moves to ANZThe second is about cushions. The minutes note that many households hold sizeable pre-payment buffers, meaning money paid ahead into redraw or held in offset accounts, which they could draw on to keep spending steady. Extra mortgage payments, the amounts borrowers choose to pay above the minimum, had eased but remained around their long-run average. That is a picture of households still saving through their loans, at a slower pace.
The third is about new lending. Demand for new housing loans had declined significantly, the minutes say, particularly from investors, while competition among lenders for good-quality borrowers remained strong. The two halves of that sentence belong together. When fewer people apply, lenders compete harder for those who do, and a borrower with solid income and equity is in a better position to ask for a sharper rate than the headline numbers suggest.
The housing market in the Board's words
The minutes describe an established housing market that eased more than the Bank had expected. National housing prices had fallen by around 1½ per cent from their peak in March, and prices were falling in some capital cities. The Board attributed the turn to the combined effect of this year's cash rate increases, the changes to property tax announced in the Federal Budget, and weaker consumer sentiment.
The same passage keeps the fall in proportion. Prices were still around 50 per cent higher than at the onset of the pandemic and about 5 per cent higher than a year earlier. For lending, that matters because it is the measure of how much equity sits behind existing loans: a small fall from a very high level leaves most owners with far more equity than debt.
Related readAfter the June hold: what a 4.35 per cent cash rate costs borrowersQueensland joined the downturn late. Cotality's index showed Brisbane home values down 0.6 per cent in July, the first clear fall after years in which the city outpaced the national average. The loans behind those prices are large. The Australian Bureau of Statistics reported on 14 August that the average new owner-occupier loan in Queensland reached a record $751,000 in June, $20,000 above the national figure.
The rise that was considered
The minutes set out two options, and the reasons for each.
| Option | The argument recorded in the minutes | Outcome |
|---|---|---|
| Raise by 25 basis points | If the risks to the inflation forecast were judged to lie well to the upside, acting early could head them off. | Not adopted |
| Hold at 4.35% | Earlier increases appeared to be bringing the economy back into balance, with time to assess new data. | Adopted, unanimously |
Reserve Bank of Australia, minutes of the 10 and 11 August 2026 meeting.
The case for holding rested on the judgement that policy was already tight enough. The minutes describe financial conditions as having tightened in response to three increases in the cash rate in 2026 and as now somewhat restrictive, with the cash rate at the top of the range of estimates of its neutral level, the level that neither speeds the economy up nor slows it down. Members judged that setting sufficiently restrictive to return inflation to target within a reasonable time.
The case for raising rested on inflation. Headline inflation eased in the June quarter on lower fuel and travel prices, but the trimmed mean, the measure the Bank watches most closely because it strips out the largest price moves in either direction, rose to 3.6 per cent. The Bank's forecast has it above 3 per cent until the middle of 2027 and around 2.5 per cent, the midpoint of the target band, late that year. Members saw the risks as lying mostly on the upside, and named events in the Middle East and stronger demand than forecast among them.
Related readOffset balances drop by a record $8.6 billion as loan arrears climbThe labour market was described as having eased more than expected while remaining a little tight, with the unemployment rate forecast to rise gradually to 4.8 per cent by the end of 2028.
How the banks read it
The Adviser's report of 26 August gives the reaction of two major banks. ANZ kept its forecast that the cash rate stays at 4.35 per cent until the second half of 2027, and added that the November meeting remains at least a risk for a rise. Commonwealth Bank kept its forecast of no change through the rest of 2026, and described the September meeting as live, pointing to the differing views among Board members that the minutes record.
Forecasts are not decisions, and both banks' central view was still a hold. What changed is the tone. A fortnight earlier the decision read as the end of a run of increases. The minutes read as a pause with a condition attached: the Board said it would need to see further progress on the path set out in its forecasts before it could be confident inflation would return to target.
What three increases already cost
The minutes refer to three increases in 2026, which together added 0.75 percentage points to the cash rate. The effect on a household depends on the size of its loan, and an illustration shows the scale.
Take a principal-and-interest loan of $751,000 over 30 years, the Queensland average for a new owner-occupier loan in June. At a rate of 5.34 per cent the monthly repayment is $4,189. At 6.09 per cent, 0.75 points higher, it is $4,546. The difference is $357 a month, or about $4,284 a year. These are illustrative figures using the standard loan formula; the rates are assumptions chosen to show a rise of 0.75 points and are not a quote from any lender.
Related readAPRA keeps the 3-point home loan buffer as rates and costs climbThat is the mechanism behind the sentence in the minutes about scheduled payments. It is also why the buffers matter. A borrower who had been paying $357 a month above the minimum before the increases could absorb all three by dropping back to the minimum. One who had been paying only the minimum had to find the money from the rest of the household budget.
A hold leaves repayments where the last rise put them
Leaving the cash rate at 4.35 per cent does not reduce any repayment. Borrowers on variable rates keep paying at the level set after the third increase of 2026, and those coming off a fixed rate move to the variable rate of the day.
Where lenders stand
For lenders the minutes confirm what their own reports showed earlier in the month. Commonwealth Bank's full-year result on 12 August put home loan arrears at 0.73 per cent and recorded more than 147,000 payment arrangements with customers in the year. Westpac's quarterly update on 10 August reported mortgage applications running about 20 per cent below their level before the Budget.
Lower demand and steady funding costs are a combination that favours the borrower who shops around. The ABS counted 66,449 owner-occupier loans moved to a different lender in the June quarter, only 0.9 per cent fewer than in the March quarter, at a time when new lending was falling much faster. Lenders are competing for a smaller pool of new customers, and the minutes say so in as many words.
The other side of that competition is care. A lender that expects repayments to take a growing share of income, as the Board does, tests new applications against a rate above the one it charges, and has reason to look hard at borrowers with little margin. Strong competition for good borrowers and close scrutiny of stretched ones are both features of the same market.
The data before the September meeting
The minutes list what the Board will have in hand when it next meets at the end of September: further monthly inflation reports, new labour market figures and the June quarter national accounts. Each will be read against the forecasts published in August.
For Queensland borrowers, two other releases fall in the same window. The Australian Prudential Regulation Authority is due to publish its June quarter figures on banks' property lending in September, including the share of home loans that are behind on repayments. And the monthly home value indexes for August, published at the start of September, will show whether Brisbane's fall in July was the start of a trend or a pause.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
