The cash rate just hit 4.85 per cent. Here's what Tuesday's RBA decision means for your mortgage

The Reserve Bank lifted the cash rate by another 0.25 percentage points on Tuesday, taking it to 4.85 per cent. It's the fifth increase this year and the highest the cash rate has been since late 2008. For anyone on a variable rate home loan, this is the number that eventually works its way into your monthly repayment, once your lender decides whether, and when, to pass it on.

A rate rise, but not a unanimous one

The Reserve Bank board voted six to three in favour of the increase, with three members preferring to hold rates steady. That split is worth sitting with for a moment, because it tells you the decision wasn't straightforward even for the people making it. The board's statement said inflation "remains elevated" and that recent data show it is "broadly based," meaning the pressure isn't limited to one or two categories like petrol or rent, it's showing up across the economy. The board also flagged "an increasing risk that higher inflation expectations will become embedded," which in plain English means the Reserve Bank is worried that if people and businesses start assuming prices will keep rising quickly, that assumption tends to feed on itself and becomes harder to unwind.

What this costs you each month

Canstar's modelling, published this week, gives a useful sense of scale. On a $600,000 loan with 25 years remaining, this latest 0.25 percentage point rise adds around $92 to the monthly repayment. Added up across all five hikes since February, that same loan is now costing around $456 more a month than it was at the start of the year. For a $500,000 loan the equivalent increase is around $77 this month and $380 across the year, and for an $800,000 loan it's around $123 this month and $607 across the year. These are modelled figures for a standard principal and interest loan, so your own number will depend on your rate, loan term and how your particular lender prices its variable loans.

For context, the average new owner occupier loan written in the June quarter was around $731,000, so a lot of Victorian borrowers will be looking at numbers closer to the higher end of that range.

Who passes it on, and when

At the time of writing, Macquarie Bank is the first lender to confirm it is passing the rise on in full, effective 19 November, lifting both its variable mortgage rates and its savings rates by 0.25 percentage points. The other major lenders typically announce their own response within a week or so of an RBA move, though the timing and whether they pass it on in full can differ from bank to bank, so it's worth keeping an eye on a letter or notification from your own lender rather than assuming it will match what you read in the news.

Where rates go from here

Honestly, nobody has a confident answer, and that includes the Reserve Bank itself. Governor Michele Bullock told reporters after the decision, "I don't know what the next move will be," which is a more candid answer than markets are used to getting. The economists who follow this closely are genuinely split. Betashares' David Bassanese expects at least one more rise, with February next year his base case, and ANZ has flagged some risk the cash rate could reach 5.10 per cent by December or February. On the other side, Capital Economics believes the Reserve Bank is done tightening for this cycle and expects cuts to start late next year, and CBA's current view is that the rate holds at 4.85 per cent until cuts begin around August 2027. If there's a lesson in that spread of views, it's that nobody should be planning their budget around a confident prediction of what happens next, from any one source, including this one.

What it means if you're borrowing or already repaying a loan

If you're applying for a new loan, it's worth understanding how lenders actually test affordability. On top of whatever rate you're offered, lenders are required to check you could still make your repayments if your rate were three percentage points higher, a rule set by APRA and still in place. That buffer exists for exactly this kind of stretch, a run of rate rises in a short space of time, so a loan that gets approved today has already been tested against a rate well above what you'd actually be paying.

If you already have a mortgage and this rise is starting to bite, the sooner you talk to a broker the more options tend to be on the table. Refinancing, adjusting your loan term or reviewing whether you're still on a competitive rate are all worth a conversation before a repayment becomes a genuine problem, not after.

Figures note: cash rate and board decision details from the Reserve Bank of Australia's 3 November 2026 media release and ABC News's live coverage of the decision. Repayment and loan size figures from Canstar's analysis published 2 November 2026. APRA's serviceability buffer figure confirmed current as of early November 2026.

This article is general information only and does not take into account your personal objectives, financial situation or needs. Please speak with a Claremont Financial broker before making any borrowing decision.