RBA Lifts Cash Rate to 4.6%: What Borrowers Face Next
Consumer sentiment has hit a near-recession low while 90% of mortgage holders expect further rate rises after the RBA's September move to 4.6%.
The Reserve Bank of Australia's September decision to lift the cash rate to 4.6% has sent consumer confidence to its lowest point in decades, with a new survey revealing that the mood among mortgage holders has turned decisively grim — and that many expect the pain isn't over yet.
According to the Westpac–Melbourne Institute Consumer Sentiment survey, conducted between 28 September and 1 October, just over 80% of Australians surveyed after the RBA's decision now expect mortgage rates to rise further over the next year. That's up sharply from 63% the month before. Among mortgage holders specifically, the share jumps to nearly 90%, and more than 40% of that group expect rates to climb by over a full percentage point in the next 12 months.
MPA Australia reports the Mortgage Rate Expectations Index rose 5.5% to 179.7 — close to its May cycle high of 181.
What the September Hike Means for Your Repayments
The September move takes the cash rate to 4.6%, its highest level since 2011. The standard variable mortgage rate is now set to exceed 9% for the first time since 2008 — a threshold that carries real psychological weight for borrowers who have only known a low-rate era.
On a $600,000 variable-rate loan, Mortgage Choice estimates the September hike alone adds around $90 a month to repayments. For borrowers who have tracked this entire tightening cycle, the cumulative increase is far larger — a meaningful and sustained drain on household budgets.
The headline Consumer Sentiment Index fell 4.7% to 80.4, down from 84.4 in September. That figure masks an even starker reading: respondents surveyed before the RBA's September decision produced a sentiment reading of 86.9. Among those surveyed after the decision, sentiment plunged to 67.2 — a level that, in full monthly surveys, has only previously been recorded during the early 1990s recession.
Westpac head of Australian macro-forecasting Matthew Hassan put it plainly: "Australian consumers remain stuck in a cost-of-living nightmare that seems to have no end in sight."
November Is the Next Critical Date
With the RBA's next board meeting scheduled for 2–3 November, Hassan said the bank believes "a follow-up rate hike is likely", pointing to fuel costs that continue to flow into broader prices. The RBA has now raised rates three times in 2026.
That means borrowers on variable rates may face another repayment increase within weeks. If you haven't stress-tested your household budget at a cash rate above 5%, now is the time to do it — before the decision, not after.
Borrowers with fixed-rate loans expiring in the next six to twelve months are in a particularly exposed position. They will roll off rates set at historic lows and land directly into one of the most expensive variable-rate environments in nearly two decades. Talking to a broker before your fixed period ends gives you the most options — including locking in a new deal now rather than defaulting onto a standard variable. You can compare current refinance options or estimate your new repayments before the RBA meeting.
One Bright Spot: Buyer Sentiment Actually Edged Higher
Against that backdrop, housing was the outlier. The "time to buy a dwelling" index actually rose 3.4% to 88.4, led by outright homeowners, retirees, 25- to 34-year-olds, and those earning more than $80,000 a year. Hassan acknowledged this was unusual: "Improvements following an interest rate rise are rare but not unheard of, particularly when buyer sentiment is already coming from a very weak level."
The likely explanation is that falling home values are beginning to open genuine entry points. Cotality data shows national home values declined 1.1% in September — the sixth consecutive monthly fall — leaving them 5.2% below their March peak. For buyers who have been priced out, that correction is meaningful, even if affordability remains stretched by historical standards.
Buyer sentiment varies sharply by state. NSW and Victoria are comparatively less downbeat at 93, while Queensland sits at 85, and Western Australia (71) and South Australia (70) remain well below the national average. House price expectations rose 4.3% to 115.1, but consumers are split: 31% expect prices to fall further over the next year, 18% expect no change, and 46% expect prices to rise.
What to Do Right Now
**On a variable rate?** Check your current rate against what's available in the market. After every hike, lenders compete for refinancers — and if you haven't reviewed your loan in the past twelve months, you may be paying more than necessary. Use our refinance savings calculator to see what switching could save you.
**Considering a fixed rate?** Market pricing already factors in a potential November hike; any fixed rate on offer today reflects that expectation. Locking in might feel protective, but it removes flexibility if rates peak sooner and begin falling in 2027. A split loan — part variable, part fixed — can strike a reasonable balance. Explore current home loan options.
**First home buyer?** Rising first-home buyer market share and falling prices suggest more people are finding a way in despite higher rates. Use our borrowing power calculator to understand what you can realistically borrow at today's rates before the November meeting changes the picture again.
The next few weeks are pivotal. The borrowers who prepare now will be better placed than those who wait and react.
Read MPA Australia's full coverage of the Westpac–Melbourne Institute survey