On 29 September 2026, the Reserve Bank lifted the cash rate by 0.25 percentage points to 4.60%. It was the fourth increase this year, taking the cash rate to its highest level since late 2011. The decision was unanimous.
Here's what it means in practical terms.
Why the RBA raised rates
In its statement, the RBA's Monetary Policy Board said inflation remained elevated and that some of the upside risks it flagged in August were materialising. It pointed to:
- Higher global energy prices as the conflict in the Middle East broadened
- Rising global prices for technology-related goods driven by AI demand
- Ongoing pressure on domestic capacity, with firms passing on higher costs
- Short-term inflation expectations that remain elevated
The day after the decision, the ABS reported annual inflation of 4.0% for August.
The Board also said it would do what it considers necessary to bring inflation back to target, including raising rates further if needed.
What it means for your repayments
Most lenders pass on rate rises to variable rate borrowers within a week or two, though your actual repayment may not change until after you've been formally notified.
For a 30-year principal and interest loan, a 0.25% rise adds roughly:
| Loan amount | Extra per month |
|---|---|
| $400,000 | about $66 |
| $600,000 | about $98 |
| $800,000 | about $130 |
Across the full 1.00% of rises in 2026, a $600,000 borrower whose rate went from about 5.49% to 6.49% is paying around $385 a month more than at the start of the year.
Use the rate rise impact calculator on our website to see your own numbers.
What happens next?
The next RBA meeting is on 3 November 2026. Some economists expect another rise, while others expect a hold. Nobody knows for sure, and the August and September inflation figures will weigh heavily.
What to do now
1. Check your new repayment
Log into your banking app or look for your lender's letter. Make sure your direct debit covers the new amount.
2. Compare your rate
Canstar estimated the average owner-occupier variable rate would sit around 6.49% after this rise, with competitive rates around 6.25% and some below 6.0%. If you're well above that, ask your lender for a discount or consider refinancing.
3. Build or protect your buffer
Money in an offset account reduces the interest you pay and gives you breathing room if rates rise again.
4. Review your budget
Insurance, energy, phone and subscriptions are all worth shopping around.
5. Talk early if you're struggling
If repayments are becoming difficult, contact your lender before you miss a payment. Hardship options exist. Read what to do if you're struggling with your mortgage.
Should I fix my rate now?
Fixed rates have already risen as lenders priced in more hikes. Fixing gives certainty but limits flexibility. We explain the trade-offs in fixed vs variable in 2026.
What about buyers?
Higher rates reduce borrowing power. Lenders assess you at about 3% above the actual rate, so every 0.25% rise trims what you can borrow. On the other hand, values in several markets have eased, and buyers face less competition. If you have pre-approval, check whether your lender has reassessed it.
Frequently asked questions
When will my bank pass on the rise?
Most lenders announced changes within days, with effective dates in early to mid-October. Check your lender's website or app.
Do fixed rate borrowers pay more?
Not during the fixed period. Your rate only changes when the fixed term ends.
Will savings rates go up too?
Some banks lift savings rates, but often not by the full amount. Shop around.
Want to know if you're paying more than you should after the latest rise? Call Finfident on 0424 545 654 for a free rate review.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.