This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.
Key takeaways
- The June quarter 2026 CPI landed at 3.8% annual headline (0.6% for the quarter) and 3.6% annual trimmed mean (0.8% for the quarter) on 29 July, both below the market's 0.7% headline and 0.9% trimmed mean pencil.
- The RBA's May Statement on Monetary Policy had the trimmed mean at 3.8% for the quarter. It came in 3.6%, a two-tenths undershoot on the RBA's own forecast horizon.
- Housing rose 6.8% for the year, driven by electricity up 22.4% as government rebates unwound. New dwelling prices rose 5.8%. Rents rose 3.6% for the year, unchanged from May.
- Westpac IQ's Luci Ellis on 29 July dropped the double-hike call and moved to a hold framing, with some of the public commentary floating a 25bp cut to 4.10% at the August meeting.
- CBA's Belinda Allen sees the RBA on hold at the 11 August meeting and for the remainder of 2026.
- The +25bp August hike scenario we mapped on 23 July is now off the immediate table. On a $600k P&I investor loan, the August meeting is either flat (hold) or about $100 a month cheaper (25bp cut fully passed through).
- The mid-July refinance window priced against a 4.35% terminal has widened, not closed. Second-tier lenders have room to sharpen further off a confirmed hold-or-cut consensus.
This article is general information only. It does not consider your personal circumstances and is not financial or credit advice. Speak to a licensed mortgage broker or credit adviser before acting on any of the figures below.
What the ABS actually released yesterday
The ABS Consumer Price Index for the June quarter 2026 hit at 11:30am AEST on 29 July. The headline numbers:
- Headline CPI: 0.6% for the quarter, 3.8% for the year to June, down from 4.0% for the year to May.
- Trimmed mean: 0.8% for the quarter, 3.6% for the year to June, effectively steady on the March quarter's underlying pace.
- Headline fell 0.1% in the June month itself, on the monthly indicator, with fuel down 10.9% subtracting 0.4 percentage points from the month.
The market consensus in the days before the release, aggregated across Big 4 economist notes and captured in Westpac IQ's own preview and reaction note, was for a 0.7% quarterly headline and 0.9% quarterly trimmed mean, with the annual trimmed mean rising to 3.7%. Both prints undershot both dimensions of the consensus and both dimensions of what the RBA had itself pencilled in the May Statement on Monetary Policy outlook at 3.8% trimmed mean.
Two categories drove the story. Housing rose 6.8% for the year and remains the single biggest annual contributor. Inside housing, electricity is up 22.4% for the year as Commonwealth and state government rebates continue to unwind. New dwelling prices rose 5.8% for the year, up from 5.6% for the year to May, still absorbing the construction cost step-change of the last two cycles. Rents rose 3.6% for the year, unchanged from the May print and running below the ABS's Housing category as a whole.
The undershoot was on the underlying number. That is the number the RBA cares about, and that is why the August meeting has now moved.
Why the trimmed mean at 3.6% is the whole story
The RBA does not target headline CPI. It targets underlying inflation, which for the last two decades has been operationalised as the trimmed mean and the weighted median as reported by the ABS. Headline moves with fuel prices, fresh food prices and one-off subsidies and rebates. The trimmed mean strips the top and bottom 15% of price changes and captures what is happening in the broad middle of the basket.
The May Statement on Monetary Policy had the trimmed mean at 3.8% by the end of the June quarter. The board's forecast horizon on that release had underlying inflation returning to the top of the 2 to 3% target band around the middle of 2027. A June quarter print at 3.8% would have kept that trajectory on track. A print at 4.0% would have been a hawkish surprise that lifted the odds of a live August hike. A print at 3.6% is the opposite: it says the return to target is happening faster than the board expected, on the measure the board actually uses.
Two-tenths on the trimmed mean is not trivial. Over the last four RBA tightening cycles, the board has moved on surprises of that scale in either direction. In this direction the move is not a hike. It is at minimum a signal that the next move, whenever it comes, is a cut rather than a hike. The question the 11 August meeting now answers is which one, not whether.
What Westpac and CBA are now saying
Westpac IQ published its 29 July note within hours of the print. The chief economist Luci Ellis reframed the August call from what the team had been describing as a "hawkish hold" toward a straight hold. The team's public wording confirmed the double-hike view for 2026 was off the table. Some of the follow-up commentary Westpac put out during the day went further and floated the possibility of a 25 basis point cut to 4.10% at the August meeting, on the argument that the trimmed mean at 3.6% is close to what the RBA had wanted to see before easing. The Adviser reported the shift late on 29 July under the banner "Westpac scraps double hike call as CPI drops".
CBA's line has been the mirror image of Westpac's hawkish call for months. Head of Australian economics Belinda Allen was on the record on 29 July that CBA "continue to expect the RBA to remain on hold in August and for the remainder of 2026", per CBA's newsroom note. The house view now is that with growth slowing as expected, inflation tracking below the May pencil, the jobs market softening a little faster than expected, and the housing market weakening more than the board had built in, the RBA is firmly on the sidelines. CBA is holding to cuts as a 2027 story rather than an August 2026 event.
Between the two, the range for 11 August is now hold-plus-dovish to a live 25bp cut. Hike scenarios have essentially closed on the trimmed mean number. The Finder RBA Cash Rate Survey had 55% of economists calling for at least one more hike in calendar 2026 in the days before the print. That share collapses on the trimmed mean at 3.6%. Any economist whose hike call was contingent on Q2 CPI printing at or above the RBA's May pencil is out of the hike camp by construction.
The mortgage math on a $600k investor loan, revised
The 23 July piece mapped three scenarios: hold at 4.35%, +25bp hike to 4.60%, or a Westpac-style path to 4.85%. Two of those are now off the immediate table. The table below replaces them with the two live scenarios for 11 August and adds a third live scenario for the November meeting, using the same $600k, 30-year, P&I investor mortgage baseline.
| Scenario | Cash rate | Investor variable (illustrative) | Monthly P&I | Change vs today |
|---|---|---|---|---|
| Today | 4.35% | 6.55% | $3,812 | baseline |
| Hold on 11 Aug | 4.35% | 6.55% | $3,812 | flat |
| 25bp cut on 11 Aug | 4.10% | 6.30% | $3,712 | -$100/mo, ~$1,200/yr |
| 25bp cut by November | 4.10% | 6.30% | $3,712 | -$100/mo, ~$1,200/yr (delayed one quarter) |
The pass-through math is symmetrical with the hike scenario we ran last week. A 25 basis point cash rate move at full pass-through is roughly $100 a month on a $600k P&I investor loan and $125 a month on the equivalent interest-only loan at 6.85%. Big 4 lenders averaged full pass-through inside 30 days on the last easing cycle, though the pattern on the way down tends to be slower than on the way up, with front-book sharpening for new customers running ahead of back-book relief for existing borrowers. That gap is where the refinance window shows up.
Two housekeeping points on this table. The 25bp-cut scenario is the more aggressive of the two live paths, on Westpac's own commentary rather than the consensus. CBA and most of the other Big 4 house calls still have hold as the base case for 11 August with any easing pushed into late 2026 or 2027. And, critically, the negative gearing and CGT reform trajectory the API Q3 2026 survey captured on 28 July has not moved. The tax reset on 1 July 2027 is a separate axis from the cash rate and it is still the dominant medium-term factor in leveraged residential returns.
The refinance window just widened again
The mid-July refinance window that we mapped on 14 July had 18 lenders offering sub-5.90% variable rates against a 4.35% terminal cash rate assumption. The 23 July piece flagged that a confirmed August hike would pull those offers within 48 hours. The trimmed mean at 3.6% is the exact opposite of a confirmed hike, and the window now has room to widen further rather than close.
Three things happen inside a refinance window that has just been reinforced by an inflation undershoot:
Second-tier lenders sharpen first. Macquarie, ING, Bankwest, Virgin Money and the second-tier mutuals were pricing off a hold-or-hike assumption on their July sheets. On a confirmed hold-or-cut path, their cost-of-funds curve steepens the discount they can offer against Big 4 rates for new business. Landlords with a quote from mid-July can now legitimately ask their broker or lender to re-mark against the post-29 July curve, particularly on fixed-rate slices priced off two-year and three-year swap.
Big 4 front-book sharpens next. Big 4 pricing tends to follow the second tier by two to four weeks in a re-pricing cycle. That means the sharpest Big 4 offers of the year on investor variable and investor fixed are typically written in the four to six weeks after a dovish surprise, not before it. A landlord with an application already in the market is in the strongest possible position.
Cashback re-emerges. Refinance cashback offers that had broadly disappeared from the market through H2 2025 have been quietly re-emerging at second-tier lenders through July 2026. A confirmed dovish RBA on 11 August is the kind of catalyst that brings them back at Big 4 scale.
For the ATO's Division 40/43 rental property deductions checklist purposes, refinance costs on an investment loan are generally deductible over the life of the loan or five years, whichever is shorter, on a straight-line basis. The deductibility of the switching cost does not change with the RBA number. What changes is the size of the ongoing interest saving that sits on top.
The 12-day landlord playbook
Twelve days separate 30 July from the 11 August decision. Four moves are worth making inside that window on a hold-or-cut base case, and none of them are a bet on which way the RBA jumps.
Push refinance applications through. The consensus is now that the rate cycle has peaked. That is exactly the point in a cycle where lenders sharpen the front book to compete for switchers. The paperwork lag on a residential investor refinance is typically four to six weeks. Applications lodged in the first week of August are settling into the sharpest offer sheet of the second half of 2026.
Model the P&L on the Big 4 hold base case, not the Westpac cut. Belinda Allen's line, that the RBA remains on hold for the remainder of 2026, is the correct base case for landlord cash-flow planning. The Westpac cut is upside, not baseline. A landlord who has already built the +25bp August hike into cash-flow planning under last week's scenario 2 can reverse that reserve back into offset. A landlord who was running a stretched cash flow on the +50bp scenario 3 now has room to breathe, but nothing about the operating-cost line has improved.
Do not release the offset buffer. The +25bp hike is off the immediate table but the electricity line is not, the insurance line is not, and the 1 July 2027 tax reset is not. Every dollar sitting in an offset account against an investor mortgage still earns exactly the mortgage rate as a risk-free, tax-effective return. The right home for cash that was going to sit in a term deposit or a savings account through the second half of 2026 is still the offset, not because the RBA is about to hike but because the after-tax return still beats every other liquid alternative for a leveraged landlord.
Book the tax appointment early. The 29 July print does not change the ATO's Tax Time 2026 data-matching program, which is prefilling myTax with 2.3 million property records including rental bond board data from every state and territory and Airbnb host data from more than 190,000 short-stay listings. A confirmed dovish RBA typically pulls forward accountant demand for H2 refinance advice and property structure work, and the front half of August is the last window for a comfortable appointment before the September crunch.
The bottom line for the H2 2026 landlord
The 23 July piece described the 19-day runway to the RBA meeting as a preparation problem, not a prediction problem, and framed the three scenarios as still live. The 29 July print killed scenario 2 (+25bp hike) and scenario 3 (path to 4.85%). It leaves scenario 1 (hold at 4.35%) as the consensus and adds a new scenario 4 (25bp cut to 4.10%) as the live upside case. Nothing about the direction of travel is now hike-shaped.
That does two things to a landlord's H2 2026 planning. It removes the tail risk on the mortgage line, which was the largest single cost variable heading into the August decision. And it clarifies that the largest remaining risks to leveraged residential returns are the tax reset on 1 July 2027 and the operating-cost lines that a dovish RBA does not touch. The mortgage risk was the loud risk. The tax risk is now the loud risk.
Propkt users can flip the +25bp scenario off in their cash-flow view and set the mortgage calculator to the hold and 25bp-cut cases against an actual loan balance. Recurring expenses like council rates, insurance, water and body corporate fees keep tracking against forecasted rent income in one dashboard, so any pass-through of a November cut, if it lands, shows up against yield without a rebuild. The 11 August meeting is 12 days away and, for the first time this year, the mortgage line is no longer the number a landlord has to plan around.