The Reserve Bank of Australia (RBA) left the cash rate unchanged today for the third consecutive month - the longest such period since rates began rising in May 2022.

The June figure of 4.1% is thus still the official going rate for lenders around the country and homeowners are thankful to see it so, with this figure the highest experienced in 11 years.

This afternoon's announcement was also significant as it was RBA governor Dr Phillip Lowe's last one as head of the central bank.

From September 18, deputy governor, Michele Bullock will take over a seven-year role as RBA leader, with her position overseeing the creation of a specialist monetary policy board (MPB).

RBA's song remains the same

As with the cash rate itself, Dr Lowe's September announcement remained the same as that of August, with the only two differences including:

Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation, although growth has slowed.

This inflation change comes off the back of the Australian Bureau of Statistics (ABS)' latest consumer price index (CPI) data, which saw this figure drop to its lowest in 18 months - another welcome sign for homeowners.

The CPI rose 4.9% in the 12 months to July 2022, which is the smallest such number since February 2022.

It is also down from 5.4% in June with its peak being 8.4% in December 2022.

In Dr Lowe's second difference to his August announcement, he noted the increased global uncertainty around China's economic outlook, which he said is due to ongoing stresses in the property market.

The ABS also highlighted that housing was the most significant contributor to the July annual increase (+7.3%).

Certainly, the outgoing governor remains determined to "return inflation to target within a reasonable timeframe" and is undaunted by the possibility of "some further tightening of monetary policy" to do so.

No change = no surprise

While the Big 4 banks forecasted the non-move earlier today, the announcement was still highly welcome, particularly at the start of the traditionally busy spring real estate season.

Three of the Big 4 lenders also believe the cash rate is at its peak and will not shift up - or down - further until mid-late 2024.

Only NAB is predicting one more rate hike in the current cycle, due in December.

The next question already being asked as well is, "When will the cash rate drop?" and again, the Big 4 are predicting late 2024.

However, the RBA believes the target rate of 2%-3% won't be reached until late 2025, and with a new leadership beginning in two weeks, it's highly difficult to predict such a date. 

CoreLogic is also cautious about predicting such a date, with executive director, Tim Lawless implying he'd prefer further rate changes, as it may be too soon for a pause in the cash rate to significantly impact buyer demand.

"Although housing values have trended higher in the past few months, the recovery trend is occurring across volumes that remain slightly below the five-year average," Mr Lawless said.

"A more robust recovery in housing market activity is likely to be constrained by high interest rates and affordability hurdles in the short term."

Mr Lawless noted that there is also more to the property market than meets the eye.

Even in a potentially better world of peaked rates, lower cost of living pressures, and lifting sentiment measures, consumer confidence "had a long way to recover" before neutrality was reached.

"Consumer sentiment, which shows a close relationship with the volume of home sales, has held close to recessionary lows for almost a year," Mr Lawless said.

"A material rise in dwelling sales is unlikely until we see a lift in consumer spirits."

He added that recent rises in new listing activity may not be all to the good, as it could test buyer demand - thus leading to milder growth in housing values towards the end of this year.

"While a pause in the cash rate may gradually instill more confidence in the market, this is still very much an uncertain and thinly traded upswing," he said.

The RBA's next monthly cash rate announcement will be on Tuesday, October 3, 2023, at 2.30pm AEDT.

Incoming governor, Michelle Bullock, will make this announcement for the first time after her seven-year RBA term begins on September 18.

To explore your home loan options and to be on the front foot for any future rate rises, get in touch with one of our home loan experts today.