RBA Cash Rate Hike Looms: What Borrowers Need to Do Now
All four major banks expect the RBA to raise the cash rate from 4.35% to 4.60% on 29 September. Here's how to protect your repayments.
Australia's unemployment rate climbed to 4.6% in August 2026, its highest reading since November 2021. By all rights, that number should give the Reserve Bank of Australia pause. It hasn't. All four major banks — Commonwealth Bank, ANZ, NAB and Westpac — are calling a 25-basis-point cash rate rise on 29 September 2026, and financial markets are pricing roughly a 95% chance of exactly that outcome. If they are right, the cash rate will move from 4.35% to 4.60%.
As a mortgage broker, I am not surprised. I am concerned about how many borrowers are underestimating what is coming.
Why the Jobs Numbers Are Not Stopping a Hike
On the surface, a five-year unemployment high looks like a reason for the RBA to hold. Drill into the data and the picture is less alarming than the headline suggests.
According to the Australian Bureau of Statistics (ABS) August labour force release, the headline rise came from more Australians looking for work, not from mass job losses. The participation rate jumped 0.2 percentage points to 67.1%, matching its highest level on record. ABS head of labour statistics Sean Crick said August saw a higher proportion of people "previously not in the labour force moving to being unemployed" compared with recent years.
The number of unemployed people rose by 28,200 to 722,900. Part-time employment rose by 46,000 in August while full-time employment fell by 6,000. Hours worked rose 0.7% and the underemployment rate fell to 6.2%.
CBA senior economist Ashwin Clarke noted that cost-of-living pressures are drawing more people into the workforce. "The increase in the participation rate has likely been supported by the uptick in inflation and interest rates, as households seek to recoup some of their lower real incomes by working more," Clarke said. "Employment growth and other labour market indicators remain solid and there are no signs of a sharp deterioration."
ANZ senior economist Jasmine Zheng urged caution about reading too much into one month's figures. "The rise in the unemployment rate is consistent with a labour market that is becoming less tight over time and will ultimately help to reduce inflationary pressures," she said. ANZ expects a 25-basis-point September hike and a further rise in November, which would take the cash rate to 4.85% by year's end.
RBA Governor Michele Bullock has been explicit about where the Board is comfortable letting unemployment settle. "I think that between 4.5 and 5 [unemployment rate] will probably take enough heat out of the labour market that'll ease pressure on inflation," she told a CEDA fireside chat this week. At 4.6%, August sits toward the bottom of that range — not enough to change the calculus.
What Fixed Rates Are Already Telling You
Lenders have not waited for the official announcement. In September alone, 18 lenders have raised at least one fixed-rate term, with ten lifting a combined 266 fixed rates by an average of 0.33% in a single week.
Macquarie Bank raised fixed home loan rates for the second time this month on 24 September, following an earlier round of increases of up to 0.30 percentage points on 8 September. The bank's one-year fixed rate now sits at 6.49%, its two- and three-year rates at 6.59%, and its four- and five-year rates at 6.64%. Aussie and ubank also lifted fixed rates by up to 0.25 and 0.30 percentage points respectively in moves that are Aussie's second rise this month. CBA lifted fixed rates on 22 September, following similar moves from NAB, ANZ and Westpac.
As MPA Australia reports, on a $600,000 owner-occupier loan the September move alone would add around $91 per month to repayments. On a $1 million loan with 25 years remaining, the combined effect of September and November rate increases would leave monthly repayments approximately $759 higher across five rate rises.
The strain is not evenly spread. In trend terms, Tasmania (5.2%) and Victoria (5.1%) currently have the highest state unemployment rates, while the ACT (4.0%) and New South Wales (4.3%) record the lowest. Higher interest rates, however, do not discriminate by postcode.
Three Things to Do Before Tuesday
There are practical steps every borrower can take before the RBA's 29 September announcement.
**Review your rate.** If you are sitting on a variable rate above 6%, there may be more competitive options available. Use our home loan comparison tool to benchmark your current deal before lenders reprice again.
**Model the impact.** Our repayment calculator lets you see exactly what a 4.60% cash rate — and potentially 4.85% in November — does to your monthly commitments. Know the number before it hits your statement.
**Run a refinance check.** Even with a rate rise, switching to a more competitive loan could offset part of the increase. Our refinancing savings calculator shows whether moving makes sense for your situation.
Industry analysts note that owner-occupiers can still find rates below 6%, but those options will likely become scarce once the RBA moves on Tuesday. The window may be closing quickly.
The RBA decision is due at 2:30pm AEST on 29 September — the day before August inflation data is released. With all four major banks aligned on the outcome, now is the time to review your mortgage, not after the announcement.