The RBA has done it again. On 29 September 2026, the Board lifted the cash rate by 25 basis points to 4.60%, the fourth increase this year and the highest level since November 2011 (RBA media release). The decision was unanimous, and it followed a very different tone from just a month earlier.
Back in August, the Board had held rates steady at 4.35% for a second straight meeting, and the language at the time was cautious rather than committed to further action (see our earlier breakdown, RBA Holds at 4.35%). By September, that caution had tipped into action. Here’s what actually changed, what the Bank said about it, and what it means depending on your own situation.
Why the RBA moved again
The Board’s own statement points to a combination of factors rather than a single trigger. Inflation remains elevated, and some of the upside risks flagged back in August have now materialised. Specifically, the RBA cited a broadening conflict in the Middle East pushing global energy prices well above what had been assumed in its August forecasts, alongside rapid AI-driven demand growth lifting global prices for technology-related goods, and continued pressure on domestic capacity (RBA media release).
Recent inflation outcomes also came in stronger than the Board had expected at its previous meeting, and short-term measures of inflation expectations remain elevated. Growth has slowed, but by less than the Board had anticipated for the June quarter. Put together, the Board judged that another hike was warranted to stop high inflation becoming embedded in the economy.
This is the fourth hike of 2026, following earlier increases that took the cash rate from 3.60% at the start of the year up through 3.85%, and further rises before August’s back-to-back holds (we covered the lead-up to this exact meeting in The RBA’s Closest Call of 2026, where markets were pricing roughly a 55/45 split between a hike and a hold). Cumulatively, that’s 100 basis points of tightening in a single year.
What this actually costs, in real numbers
Here’s where the headline rate turns into something borrowers actually feel. On an illustrative $600,000 loan over a 30-year term, a full 100 basis points of increase, moving from around 5.89% to around 6.89%, lifts the monthly principal and interest repayment from roughly $3,555 to roughly $3,948. That’s an increase of close to $393 a month, or somewhere near $4,700 a year, on the same loan balance, purely from rate movement this year.
These figures are illustrative only, calculated on a standard principal and interest basis, and your own numbers will depend on your actual loan size, term and rate. For your specific numbers, our home loan calculator is a faster starting point than doing the maths by hand.
Snapshot: variable rate borrowers
If you’re on a variable rate, this increase flows through directly, usually within a few weeks of your lender’s own announcement. The RBA’s cash rate move doesn’t automatically set your rate, lenders make their own pricing decisions, but the overwhelming majority pass through some or all of an RBA increase to existing variable customers.
Worth checking now: whether your current rate still sits competitively against what your lender, or others, are offering new customers. Gaps between existing and new-customer pricing tend to widen after a rate rise, since new-customer rates often move more slowly or are used to attract switching business. If it’s been a while since you reviewed your rate, our refinancing page is a reasonable place to start.
Snapshot: borrowers with a fixed rate ending soon
If your fixed term is coming up for renewal in the next six to twelve months, this decision matters even if your current repayment hasn’t moved yet. Whatever rate you’re offered when you re-fix or roll onto a variable rate will reflect a market that has now absorbed four hikes this year, not the market you locked in against originally.
It’s worth understanding, before your fixed term actually ends, roughly where rates are likely to sit and whether locking in again, splitting your loan, or moving to variable makes more sense for your situation. We’ve written previously about how the comparison rate on a fixed loan can be more complex than it looks, worth a read if you’re weighing this decision: Interest Rate vs Comparison Rate: What’s the Difference?
Snapshot: first home buyers and borrowing capacity
For anyone yet to buy, this decision affects more than your eventual repayment, it affects how much you can borrow in the first place. Lenders apply a serviceability buffer on top of the actual interest rate when assessing loan applications, and as the underlying rate rises, so does the rate you’re effectively tested against.
That means a pre-approval obtained before this rate rise may no longer accurately reflect what you’d be approved for today. If you’re actively house hunting, it’s worth getting your borrowing capacity reassessed against current settings rather than relying on an earlier estimate. Our First Home Buyers page covers the current schemes and structures worth knowing about before you apply.
Snapshot: property investors
Investors carrying variable-rate debt face the same direct repayment increase as owner-occupiers, but the flow-on effects reach further. Higher borrowing costs squeeze the gap between rental income and loan repayments, which can affect cash flow even where rents have been rising. It’s also worth revisiting your overall borrowing capacity if you’re planning to add to a portfolio, since the same serviceability buffer applies to investment lending, often more conservatively than for owner-occupied loans. See our Investment Loans page for more on how lenders currently assess investment serviceability.
What comes next
The Board’s own language leaves the door open to further action if needed, stating it will continue to do what it considers necessary to bring inflation sustainably back to target, including raising the cash rate further if required (RBA media release). The next scheduled decision lands on 3 November 2026, with a fresh quarterly CPI print due in late October likely to shape that call (ABC News, live coverage).
Whichever way November goes, this September decision has already reset the baseline borrowers are working from. Whether you’re managing an existing loan, weighing up a fixed-rate renewal, or trying to work out what you can actually afford to borrow, the numbers underneath your situation have shifted from where they sat even a few weeks ago.
If you’d like help understanding exactly what this rate rise means for your loan, your borrowing capacity, or your refinancing options, get in touch with the hfinance team. We compare across 50+ lenders and can show you where you genuinely stand, rather than where an earlier estimate assumed you’d be.
This article is general information only and does not take into account your personal financial situation or objectives. Repayment figures are illustrative estimates based on the assumptions stated and will differ from your actual loan terms. Speak with an hfinance broker before making any lending decisions.