The August rate hold and what it means for Hobart landlords

The RBA held its cash rate at 4.35 per cent on 11 August 2026, in a unanimous decision. For Hobart landlords with investment properties, the decision brings a brief reprieve after three rate increases earlier this year. The central bank was clear, though, that it is not finished watching.

What the board actually said

The three hikes in 2026, each 25 basis points, took the cash rate from 3.60 per cent to its current level. Governor Michele Bullock described the board's position on 11 August: "We're staying put, but staying put with a very clear focus on watching how the data come in," adding that the next move could be a further increase if inflation does not track toward target.

Headline inflation fell from 4.0 per cent to 3.8 per cent in the June quarter 2026, according to SBS News, but trimmed mean inflation remained flat at 3.6 per cent. Both figures sit above the RBA's 2 to 3 per cent target band. The RBA now forecasts inflation reaching the 2.5 per cent midpoint of its target by early 2028.

ASX futures pricing, as reported by the ABC, put roughly a 50 per cent probability on a further hike by November 2026, and close to 78 per cent by February 2027. The four major banks are forecasting no further moves this year, with cuts expected to begin in 2027. CBA's Head of Australian Economics, Belinda Allen, noted that "a further rate hike cannot be ruled out, depending on the data." Canstar Data Insights Director Sally Tindall put it more plainly: "Don't bank on it."

The hold is a pause. The RBA's board statement said it "will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise."

The Hobart picture

Three rapid rate increases affect mortgage-holding investors in a specific way, and the cumulative impact tends to build over time. Selfwealth, writing after the May decision, observed that "cumulative impacts on variable-rate borrowers take time to fully flow through."

The numbers help frame it. Hobart's gross rental yield for houses sat at 3.2 per cent as at December 2025, according to PRD Research. Variable investor mortgage rates typically sit two to three percentage points above the cash rate, which puts actual borrowing costs well into the sixes at current levels. For properties purchased at 2020 to 2022 prices with significant debt, that gap between yield and cost of debt means most leveraged Hobart properties are negatively geared. Three additional hikes in 2026, on top of the increases from the earlier cycle, have widened it.

There is some offset. According to PRD Research's Hobart Property Market Update for the first half of 2026, the vacancy rate was 0.7 per cent across the Hobart region in December 2025, and just 0.5 per cent within the Hobart LGA and metro area. A healthy vacancy rate typically sits between 2 and 3 per cent. Median weekly rent for houses reached $650 in the December quarter, with growth of 4.8 per cent over the year.

Tight supply limits tenant turnover risk, and rent growth has partially absorbed higher borrowing costs. But vacancy rate is a supply measure. It tells you how hard it is to find a tenant. It does not tell you how the property performs financially once that tenant is in place.

Looking ahead from here

For landlords on variable rates, now is a reasonable time to check whether rental income covers repayments at rates 25 to 50 basis points above where things stand today. The RBA's August statement also noted that residential property prices had declined more than anticipated in recent months, a factor the board weighed in its decision.

This is not a call to act urgently. But with the rate environment likely to remain elevated through 2027, understanding how your investment property performs across a range of scenarios is worth doing before the next decision date.

A free rental appraisal is a useful starting point for checking your current return against the market. If you would like to talk through how conditions are shaping things for your property, our property management team is happy to work through it with you.