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RBA Pauses Rate Cuts; Mortgage Stress Shows Regional Divergence

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Australia’s central bank held its cash rate at 3.85% on July 9, with the Monetary Policy Committee voting 6-3 to wait. While May inflation dipped to 2.1% (core 2.4%, a 3.5-year low), June’s CPI was "slightly stronger than expected," and rising global trade policy uncertainties—like U.S. tariff hikes—prompted the RBA to seek more data confirming inflation’s steady move toward the 2.5% target.

Mortgage stress deepened with sharp regional splits: outer suburbs in Victoria (1.17% arrears) and New South Wales (1.07%) were hardest hit, with Craigieburn seeing 3.1% of homeowners behind on payments. Structural factors included high debt-to-income ratios in young family areas, making them rate-sensitive. Western Australia improved markedly—5 years of 80% house price gains cut its arrears to 0.86%—down from seven spots in the national arrears rankings five years ago to just one, while Victoria rose to top the list.