Most experts are tipping the RBA to hold steady in October 2023.
As the Reserve Bank of Australia approaches its October 2023 board meeting, the mood among economists and finance professionals is cautious but broadly settled. The RBA cash rate prediction for October 2023 from most experts is a hold, with the current rate staying put for at least another month.
Global central banks have been pausing their rate-rise cycles as inflation shows signs of improvement. Australia looks set to follow a similar path, though a hike remains possible if key economic data moves in the wrong direction.
Here is what the October 2023 decision could mean for your home loan and what you should be thinking about in either scenario.
The case for a hold
The primary argument for a hold in October 2023 is that global inflation is showing signs of improving. Central banks in the United States, Europe and elsewhere had been pausing or slowing their rate-rise cycles in the weeks leading up to the RBA’s October meeting.
With inflation tracking in a more favourable direction, there is less urgency for the RBA to tighten further right now. The board is watching the data closely and has indicated it is prepared to take a patient approach rather than move pre-emptively.
For borrowers already feeling stretched after the rapid rate rises of 2022 and early 2023, a hold would provide welcome certainty. Knowing your repayments will not increase again this month allows you to plan your finances with more confidence.
You can use our borrowing power calculator to see how your capacity sits under current rate settings.
Could a rise still happen?
A hold is the base case, but a rate rise is not off the table entirely. The key risk is a higher-than-expected monthly Consumer Price Index (CPI) reading, driven by factors such as rising oil prices and persistently high rents.
If the September quarter CPI lands above forecasts, it could shift the RBA’s calculus and prompt a rise in October or the meeting shortly after. Property prices also remain a consideration. Values in Sydney and Melbourne had been climbing through 2023, which could make the RBA cautious about cutting any time soon, even if holding looks appropriate for now.
The practical implication for borrowers is to not assume the rate-rise cycle is definitively over. Preparing your budget for the possibility of further increases remains a sensible approach.
For context on how quickly conditions shifted from the historic lows of 2021 and 2022, our article on the RBA cash rate rise in May 2022 explains how the tightening cycle began.
What a hold means for buyers
For prospective buyers, a hold in October 2023 provides a degree of clarity. You know broadly what you can borrow right now, and you can plan your search accordingly. If the RBA signals it is near the top of the rate cycle, buyer confidence tends to improve as people become more comfortable committing to a purchase.
A hold also means your pre-approval figures remain valid for a little longer, assuming your personal financial circumstances have not changed. Lenders will still apply a serviceability buffer above the current rate, but at least the base rate itself is not moving this month.
If you have been waiting on the sidelines, a period of stability could be the signal you need to re-engage with the market. Speak to a mortgage broker to make sure your finance is in the best shape possible before you start making offers.
What a hold means for homeowners
If you already own a home and are on a variable rate, a hold means your repayments stay the same this month. That is a relief after the rapid succession of rises seen from May 2022 through to early 2023.
Use a hold period to review your current rate. Variable rates vary considerably between lenders, and in a hold environment lenders are still competing for your business. Refinancing to a lower rate right now could save you hundreds of dollars each month without waiting to see whether cuts are on the way.
If you are on a fixed rate that is due to expire, a hold gives you more time to assess whether to lock in again or move to a variable product. The spread between fixed and variable has narrowed considerably, so doing a proper comparison before the rollover date is important.
Our guide on why borrowing power declines is useful if the rate rises of the past 18 months have left you feeling restricted in what you can borrow.
Common questions
Q: When is the RBA’s October 2023 meeting?
The RBA board meets on the first Tuesday of each month. The October 2023 decision was scheduled to be announced on 3 October 2023. From 2024, the RBA shifted to a new schedule of eight meetings per year rather than eleven.
Q: If the RBA holds in October, when might rates start to fall?
A hold does not automatically mean cuts are coming soon. The RBA has indicated it wants to see inflation consistently within the 2-3% target band before easing. Most economists at the time were not expecting cuts until well into 2024 at the earliest, and some pushed that timeline further out still.
Q: Should I wait for a rate cut before buying?
Timing the market around rate decisions is difficult and can mean missing good buying opportunities. Property values in the major markets were already rising through 2023 even with rates at elevated levels. Buying when you are financially ready, with the right loan structure, is generally a sounder approach than waiting for cuts that may be further away than expected.