RBA Lifts Cash Rate to 4.60 Per Cent. What It Means For Your Mortgage

Yesterday the Reserve Bank of Australia raised the official cash rate by 0.25 percentage points to 4.60 per cent, the fourth increase this year and the highest level since late 2011. If you have a variable rate home loan, or you are weighing up how much you can borrow, here is what actually changes and what does not.

What the RBA decided

The Reserve Bank's board lifted the cash rate target from 4.35 to 4.60 per cent on Tuesday 29 September, taking the total increase for 2026 to a full percentage point across four separate decisions. In its statement, the Board pointed to inflation remaining elevated, with some of the upside risks it flagged back in August now showing up in the data. It also cited a broadening conflict in the Middle East pushing global energy prices higher than earlier forecasts allowed for, along with local businesses passing on their own rising costs. The Board left the door open to raising rates again if needed to bring inflation back to target, so this is unlikely to be the last word for the year.

What this means for your monthly repayment

For most variable rate borrowers, the impact lands within a few weeks as lenders pass the increase through. According to comparison site Canstar, this single hike adds an estimated $76 a month to repayments on a $500,000 loan, $91 on a $600,000 loan, $114 on a $750,000 loan and $152 on a $1,000,000 loan, assuming a standard 30 year term. Line that up against the three earlier hikes this year and the cumulative increase for those same loan sizes runs from roughly $303 to $606 a month, on Canstar's figures.

Zooming out further, the ACTU has estimated that the four hikes together add around $460 a month to an average $731,000 mortgage, as reported by the ABC. If your repayments have gone up and you have not looked at your loan in a while, that is a reasonable prompt to check whether you are still on a competitive rate.

What it means for how much you can borrow

Rate rises do not only affect your repayments, they also affect how much a lender is willing to lend you in the first place. Property analytics firm Cotality estimates that the combined effect of this year's four rate rises has cut typical borrowing capacity by around $90,000, a reduction of roughly 9 per cent.

Part of the reason the effect is so pronounced is a rule that already builds in room for further rises. Every mortgage lender in Australia is required by APRA, the banking regulator, to check that you could still afford your repayments if your interest rate were three percentage points higher than what you are actually being charged. This is sometimes called the serviceability buffer, and it explains why your borrowing power tends to move more than your actual repayment does when the cash rate changes. Lenders were already testing your finances against higher rates before this rise happened, which is exactly why the buffer exists.

What this means for you

None of this is a reason to panic, and it is not a reason to rush into a decision either. If you already have a home loan, it is worth checking your current rate against what else is available, particularly if you have not reviewed it in the past year or two. If you are planning to buy, it is worth getting a clear, honest read on your borrowing capacity before you start looking at properties, rather than after you have found one you love.

The Reserve Bank's next full read on inflation comes with the September quarter CPI figures on 28 October, ahead of its next meeting in November. Whether this was the last rise for the year or not, we will know more by then.

If you want to understand exactly how this decision affects your own situation, whether that is your repayments, your borrowing power, or your options if you are thinking about refinancing, a conversation with a broker who can look at your actual numbers will tell you far more than any average or estimate can.

Figures in this article are drawn from the Reserve Bank of Australia's 29 September 2026 monetary policy statement, Canstar's analysis of the September 2026 rate rise, ABC News reporting of the ACTU's repayment estimates, and Cotality's analysis of cumulative borrowing power. All figures were current at time of publication and should be confirmed against your own loan details.

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.