The decision: on Tuesday 29 September 2026, the Reserve Bank raised the cash rate by 0.25%, from 4.35% to 4.60%. The Board’s decision was unanimous. If your lender passes it on in full, a variable loan costs about $81 a month more for every $500,000 owed.
Update 16 October 2026: CommBank, Westpac and ANZ passed the rise on to variable home loan rates from 9 October, and Macquarie from 15 October. The next decision is on 3 November: what to watch before it.
Last week the big banks’ economists expected this rise, and markets had priced it in, so it wasn’t a surprise. What matters now is what it does to your repayments and borrowing power, and what you can do about it.
Why the RBA raised rates
In its statement, the RBA said inflation is still too high and that some of the upside risks it had flagged are now materialising:
- Energy prices. The broadening conflict in the Middle East has pushed global oil and energy prices higher than the RBA expected in August, and higher fuel costs are flowing through to other prices.
- Inflation. Recent Australian inflation figures came in above expectations, and short-term inflation expectations remain high.
- Jobs. The labour market has eased roughly as expected.
- Uncertainty. Productivity remains weak and the housing market downturn adds uncertainty to the outlook.
On what comes next, the Board said it will do what it considers necessary to return inflation to target, including raising the cash rate further if needed.
What 0.25% costs you
Here’s the extra monthly repayment on a 30-year principal-and-interest loan if your lender passes on the full rise. It barely changes with your starting rate, so these figures hold whether you’re paying 6% or 6.5%. The second column shows what one more rise would add.
| Loan balance | One rise (+0.25%) | Two rises (+0.50%) |
|---|---|---|
| $500,000 | ~$81 a month | ~$163 a month |
| $750,000 | ~$121 a month | ~$244 a month |
| $1,000,000 | ~$162 a month | ~$325 a month |
| $1,250,000 | ~$202 a month | ~$406 a month |
Your lender sets the timing and size of any change to your variable rate and will write to you with your new repayment. Fixed rates don’t change until the fixed term ends.
Four moves worth making now
- Find out what you’re actually paying. Many borrowers on older loans pay well above what lenders offer new customers, and this rise stacks on top of that gap. Coming off a fixed rate? Here’s what to do first. A free rate review takes fifteen minutes and tells you whether switching beats staying. Our refinance savings calculator shows the break-even.
- Put your buffer to work. Savings sitting in a separate account can do more in an offset account, where every dollar cuts the interest charged at your home-loan rate.
- Don’t panic-fix. Fixed rates are set by what lenders expect rates to do, so further expected rises are usually already priced in. Fixing can still make sense for certainty, but it’s a trade-off, not a free win. Fixed vs variable, explained.
- Buying? Re-check your borrowing power. Lenders assess your loan at the current rate plus a buffer, so a higher rate means a smaller maximum loan. A pre-approval issued before the rise can come in lower at formal approval. How much less you can borrow.
The bigger picture
Rising rates and falling prices are two sides of the same coin: when borrowing costs more, buyers can pay less, and prices adjust. For owners, the pressure lands on repayments. For buyers, the same conditions mean fewer rivals and more room to negotiate, as long as your finance is solid before you bid.
If repayments are already tight, here are your options, and your rights. Acting before you miss a payment keeps the most doors open.
Common questions
How much will my repayments go up after the rise?
About $81 a month for every $500,000 you owe on a 30-year principal-and-interest loan, or roughly $162 a month on $1 million, if your lender passes on the full 0.25%. The exact figure depends on your balance, remaining term and your lender’s decision.
When will my bank pass on the rise?
Lenders usually pass RBA increases on to variable rates, often within a couple of weeks, but the timing and size are each lender’s own decision. Your lender will tell you the new rate and repayment. A fixed rate does not change until its fixed term ends.
Will rates rise again?
Nobody knows for sure. The RBA said it will do what it considers necessary to bring inflation back to target, including raising rates further if needed. Some bank economists expect another rise later in 2026; others expect this to be the last one for now.
Should I fix my rate now?
It depends on your situation. Fixed rates reflect what lenders expect rates to do, so further expected rises are often built into them. Fixing buys certainty, but usually limits extra repayments and offset use, and breaking a fixed loan early can be costly. Run the numbers on your own loan before deciding.
Does the rate rise reduce how much I can borrow?
Yes. Lenders test whether you can repay at your loan rate plus a buffer, so a higher rate lowers the maximum they will lend. If you hold a pre-approval issued before the rise, have it re-checked before you bid.
Source: RBA, Statement by the Monetary Policy Board, 29 September 2026. General information only, not financial or credit advice. Repayment figures are estimates for a 30-year principal-and-interest loan and assume the full rise is passed on.
