RBA Lifts Cash Rate to 4.60% — What It Means for Your Mortgage
The Reserve Bank has raised rates for the fourth time this year, citing persistent inflation and Middle East energy shocks. Here is what borrowers need to know.
The Reserve Bank of Australia (RBA) has lifted the cash rate by 25 basis points to 4.60 per cent at its September 2026 meeting — the fourth increase of the year and the highest the cash rate has been since November 2011.
In a statement released today, the RBA Board said it raised rates because inflation remains elevated and some of the upside risks flagged in August are now materialising. The conflict in the Middle East has broadened, pushing global energy prices significantly higher than the RBA had assumed in its August forecasts. At the same time, AI-related demand is driving rapid growth in global prices for technology-related goods, adding another layer of inflationary pressure.
The Board noted that short-term measures of inflation expectations remain elevated and that recent inflation outcomes in Australia were stronger than expected at the previous meeting.
Why the RBA Acted Now
The decision was unanimous. The Board was explicit about what prompted the move: since the previous meeting, some of the upside risks to inflation have materialised. Higher fuel prices have partially been passed through to prices of other goods and services, adding to what the RBA described as the effect of "capacity pressures in the economy."
Growth in output has slowed but was stronger than expected in the June quarter. Labour market conditions have eased broadly as expected, with leading indicators broadly stable. Meanwhile, business investment and debt growth remains strong — a sign the RBA views the economy as still generating demand it wants to moderate.
Consumer spending is easing gradually, which is what the Board had hoped to see. But the RBA also noted that housing prices have fallen in most capital cities and new housing loans have declined noticeably.
The Board was clear it has not ruled out further tightening. Its statement said: "The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed."
What This Costs Borrowers Right Now
For a borrower with a $600,000 mortgage and 25 years remaining, the latest rise adds approximately $91 a month to minimum repayments if their lender passes it on in full. The cumulative impact of the four rate hikes since February is significantly larger: borrowing capacity for a household on a median income has been reduced by almost $90,000, equivalent to around a 9 per cent decline in purchasing power, according to research by Tim Lawless at Cotality.
Macquarie Bank was among the first lenders to confirm it will pass the hike on in full. Its variable home loan reference rates will rise by 0.25 per cent per annum, effective 15 October. More lenders are expected to follow in the days ahead.
If you have not reviewed your home loan recently, this is the moment to act. Our refinance savings calculator can show you in minutes how much switching to a lower rate could save on your monthly repayments. If you want to understand how the latest rise has affected your maximum borrowing amount, the borrowing power calculator runs the current numbers.
What the RBA Is Watching Next
The Board did not declare the tightening cycle over. It flagged the Middle East conflict as an ongoing risk, noting there are scenarios where inflation is higher and activity lower than currently forecast. Oil supply disruptions are maintaining upward pressure on domestic energy prices, and the Board is watching whether those pressures embed themselves more broadly in the economy.
The language in the statement leaves the door open to further hikes: "Monetary policy is well placed to respond to developments, and the Board is focused on its mandate to deliver price stability and full employment."
Given that inflation has come in stronger than expected at two consecutive meetings, borrowers should not assume rates will hold in November.
What Borrowers Should Do Before Repayments Rise
If your lender has not yet announced whether it will pass on the full increase, monitor your lender's communications over the coming week. Most lenders have historically passed on RBA hikes in full to variable-rate borrowers within 30 days.
If you are on a variable rate, check whether you are still on a competitive rate. Brokers regularly find gaps of 0.50 per cent or more for borrowers who have not reviewed their loan in the past year. The options available include asking your lender for a rate discount, restructuring your loan, switching to interest-only repayments temporarily, or refinancing to a lender offering a lower rate.
Any of these options is worth exploring before repayments become difficult to manage, rather than after. You can see where current rates sit on the cheapest home loans page, or compare specific refinance options on the refinance page.
The full statement from the RBA is publicly available.