RBA slashes cash rate to lowest level in over 2 years
THE RESERVE BANK OF AUSTRALIA (RBA) announced a 25-basis-point cut after its August meeting, bringing the official cash rate down to 3.60 per cent. This decision marked the third reduction in the current easing cycle, which began in February 2025, bringing rates down to their lowest level since May 2023. In an unattributed record of votes, the RBA also revealed the decision was agreed to unanimously by board members. Speaking at a post-meeting press conference, RBA governor Michele Bullock said the central bank continued to analyse what developments meant for inflation and employment, while warning that the global outlook remains unpredictable.
She added that the RBA expected “labour market conditions to remain around the current levels and underlying inflation to remain sustainably at the midpoint of the 2 to 3 per cent target range”. Bullock also stressed: “Forecasts imply that the cash rate might need to be a bit lower than it is today to keep inflation low and stable and employment growing, but there is still a lot of uncertainty, so the board will continue to focus on the data to guide its policy response.”
Government accepts majority of banking review recommendations
THE ALBANESE government confirmed it has accepted eight of the nine recommendations from the Council of Financial Regulators’ (CFR) review into small and medium-sized bank competition. However, the government also said it intends to seek feedback on a recommendation to introduce a “lighter touch framework” for very small banks. Commissioned by Treasurer Jim Chalmers last year and developed with the Australian Competition and Consumer Commission (ACCC), the review aimed to help smaller banks boost competition. It found these lenders face challenges from high fixed operating costs and limited scale.
Chalmers agreed in principle to measures such as removing the requirement for small banks to automatically report certain breaches to ASIC, addressing gaps around unclaimed money, and reviewing rules for deposits tied to banking exits. Other accepted recommendations include considering raising the covered bonds cap from 8 to 12 per cent of Australian assets and replacing the annual compliance certificate with a simplified ‘responsible manager’ form. APRA will adjust its banking framework to reduce the regulatory burden on smaller lenders. APRA chair John Lonsdale said: “The changes we have committed to as part of this review strike a sensible balance between lowering the regulatory burden for banks while ensuring banks of all sizes have the financial and operational resilience to protect their depositors.”
Investors outpace owner-occupiers in new lending
INVESTORS REBOUNDED from two consecutive quarterly declines in new loan commitment numbers to dominate growth in the June 2025 quarter. New data from the Australian Bureau of Statistics (ABS) showed there were 49,065 investor loans approved in the June 2025 quarter, a 3.5 per cent rise from the previous quarter. By comparison, 80,929 new owner-occupier loans were approved, representing 0.8 per cent quarter-on-quarter growth. This figure was also 6.9 per cent higher than the value of investor loans reported during the same period in 2024 ($30.7 billion).
Meanwhile, the average investor loan size rose $1,104 to $674,259. Overall, there were 129,994 new loan commitments for dwellings, representing a 1.9 per cent rise on the March 2025 quarter, with the total loan value up 2.0 per cent to $87.7 billion. Dr Mish Tan, ABS head of finance statistics, said it was too early to see the impact of rate cuts. “Through the year, growth was more subdued at around 0.2 per cent. That said, lending activity is still at relatively high levels,” she added.
AFG unveils third brokerage investment
THE AGGREGATOR has taken a 28 per cent non-controlling stake in Sydney-based brokerage Loan Path Finance (LPF), acquiring a 28 per cent non-controlling stake in the brokerage, its first investment in a non-member brokerage. Founded in 2019 and headed up by managing director Mina Gergis, Loan Path Finance offers both residential and commercial lending, with a specialised focus on high-net-worth individuals and self-employed clients.
The group was aggregating under outsource Financial, but has now entered into an aggregation agreement with AFG as part of the transaction. The move represents the third investment by AFG since it unveiled its Broker Investments program in November 2024, but it is the first investment it has made outside of its existing broker network.
David Bailey, CEO of AFG, commented: “Our investment in Loan Path Finance highlights the strong market demand for this kind of support, extending well beyond our existing network.” The brokerage MD added: “AFG is a clear leader in the mortgage finance industry, and we expect there is a lot we could gain from its vast experience and proven leadership to help accelerate our reach in this industry. “The backing of an ASX-listed entity will assist to propel our business to the next level.” This latest acquisition by AFG follows its earlier investments in Melbourne-headquartered Empower Wealth Group and Western Australia-based Lifespan Mortgage Services, both announced in January 2025.
