RBA Lifts the Cash Rate to 4.60%: What It Means for Your Mortgage, Your Next Loan and Your Other Debts
On Tuesday 29 September 2026, the Reserve Bank of Australia raised the official cash rate by 0.25% to 4.60%. It's the fourth increase this year and takes the cash rate to its highest level since late 2011. The decision was widely expected, but that doesn't make it any easier on household budgets.
In this article I'll explain why the RBA moved, what may happen next, and what the decision means in practice for three groups: people who already have a mortgage, people who are about to apply for one, and anyone carrying credit cards, personal loans or car loans.
What the RBA decided and why
The RBA's Monetary Policy Board voted unanimously to lift the cash rate from 4.35% to 4.60%. After holding steady at its August meeting, the Board said several of the inflation risks it had flagged were now playing out.
The main reasons it gave were:
Energy prices. The conflict in the Middle East has broadened, and fuel prices are much higher than the RBA assumed in August. Some of that is already flowing through to the price of other goods and services.
Technology prices. Global demand linked to artificial intelligence is pushing up prices for technology-related goods.
Domestic pressure. Businesses are reporting cost pressures and are raising prices, or planning to. Short-term inflation expectations remain elevated.
Inflation is still too high. Underlying inflation (the trimmed mean) was 3.6% in the year to July, above the RBA's 2–3% target band.
The RBA also acknowledged the economy is slowing. Consumer spending growth is easing, home prices have fallen in most capital cities and new housing loans have dropped noticeably. In the Board's view, the three rises earlier this year have tightened conditions, but not by enough to bring inflation back to target in a reasonable time.
Is this the last rise?
Nobody knows for certain, and the RBA hasn't ruled anything out. Its statement says the Board will do what it considers necessary to return inflation to target, including raising the cash rate further if needed.
Economists are divided. In surveys before the decision, most expected 4.60% to be the peak, with the cash rate staying there until at least the end of the year. However, ANZ is forecasting another rise in November, and CBA has said a strong September-quarter inflation result could also lead to a further increase.
The next pieces of the puzzle arrive quickly. The August inflation figures are released on Wednesday 30 September, the day after this decision, and the RBA's next meeting is in November.
The short version
The cash rate is now 4.60%. The RBA has left the door open to further rises, and the next few inflation releases will shape what happens in November.
If you already have a mortgage
Variable rate borrowers
Every rise this year has been passed on in full by the major banks, usually within a week or two, and the same is expected this time. Your lender must give you written notice before your repayment changes, so watch your email and banking app over the coming weeks.
The table below shows roughly how much a 0.25% rise adds to monthly repayments. It also shows the combined effect of all four rises this year.
Loan balance | Extra per month (this rise) | Extra per month (all 4 rises in 2026) |
$400,000 | approx. $65 | approx. $257 |
$500,000 | approx. $82 | approx. $321 |
$600,000 | approx. $98 | approx. $385 |
$750,000 | approx. $122 | approx. $481 |
Illustrative only. Assumes a 30-year principal and interest loan, a variable rate of 6.20% rising to 6.45% for this rise, and 5.45% rising to 6.45% across the year. Your figures will depend on your rate, balance and remaining term.
A few practical steps worth taking now:
Check your new repayment when your lender's notice arrives, and update any direct debits if you pay by transfer.
Review your buffer. If you have money in an offset account or available in redraw, you're in a stronger position. Try to keep adding to it rather than drawing it down.
Ask for a rate review. Lenders often offer better rates to new customers than existing ones. A simple conversation can sometimes close that gap.
Consider whether refinancing makes sense. It can, but only once you've weighed the costs, any fixed rate break fees and whether you still meet today's lending rules.
If you're struggling, speak up early. Lenders are required to consider hardship requests, and it's far easier to arrange help before a payment is missed. The free National Debt Helpline (1800 007 007) is also available.
A word of caution
Extending your loan term or switching to interest-only repayments can lower your monthly repayment quickly, but both usually mean paying considerably more interest over the life of the loan. They can be useful short-term tools, but they're worth talking through before you commit.
Fixed rate borrowers
If your rate is fixed, your repayments won't change until the fixed period ends. The important thing is to plan for that date. If your fixed term expires in the next 6 to 12 months, it's likely to roll onto a higher variable rate than you're paying now. Running the numbers early gives you time to build a buffer or explore your options.
It's also worth knowing that several lenders lifted their fixed rates in the lead-up to this decision, so fixed rates on offer today already reflect expectations of higher rates.
If you're planning to buy or borrow
Your borrowing capacity will fall a little further
When lenders assess a new loan, they test whether you could still afford the repayments at a rate around 3% higher than the actual rate. Every rise in the cash rate lifts that test rate too. As a rough guide, this single 0.25% rise reduces the maximum a typical borrower can borrow by about 2%. Across all four rises this year, the reduction is closer to 8–9%.
As a rough guide, this rise alone trims about 2% off what a typical borrower can borrow.
If you have a pre-approval, check that it still stands. Many lenders reassess pre-approvals when rates change, and your approved amount may need to be recalculated.
There may also be opportunities
Higher rates have cooled buyer demand, and the RBA itself noted that home prices have fallen in most capital cities. For buyers who are well prepared, a quieter market can mean more time to make decisions, less competition at inspections and more room to negotiate. The key is to borrow comfortably within your means rather than at the very top of your approved limit.
For first home buyers, schemes such as the Australian Government 5% Deposit Scheme are still available and can help you buy sooner with a smaller deposit. The trade-off is a larger loan, so it pays to be confident about your repayments at today's rates and allow for the possibility of further rises.
Credit cards, personal loans and car loans
Credit cards
Most credit card interest rates aren't directly linked to the cash rate, and many are already around 20% or more. So a 0.25% rise doesn't usually change your card rate overnight. The bigger issue is that rising living costs make balances harder to clear.
Something many people don't realise is that credit cards also affect your borrowing power. Lenders assess a card based on its limit, not the balance. A card with a $15,000 limit can noticeably reduce how much you can borrow for a home, even if you pay it off in full every month. If you're planning to apply for a home loan, reducing or closing unused cards is one of the simplest ways to improve your position.
Personal loans and car loans
If your personal or car loan has a fixed rate, which most do, your repayments won't change. If it's a variable rate, your lender may pass on some or all of the rise. New personal and car loans are likely to be priced a little higher from here.
Buy now, pay later
Buy now, pay later services don't usually charge interest, so the rate rise doesn't affect them directly. Late fees still apply, though, and these accounts are now regulated as credit. Lenders do take them into account when assessing a home loan application.
Should you consolidate your debts into your mortgage?
Rolling high-interest debts into your home loan can reduce your monthly repayments significantly. But spreading a car loan or credit card over 25 or 30 years can mean paying much more interest overall. It works best when you keep repaying at close to your old rate and close the old accounts, so the debt doesn't build up again.
What about savers?
There is some good news for savers. Banks have generally lifted savings rates after each rise this year, although not always by the full amount. If you're building a deposit, it's worth checking that your account is still competitive.
The bottom line
This rise adds to the pressure many households are already feeling, but the right response depends on your situation. If you have a variable loan, check your new repayment and protect your buffer. If your fixed rate is ending soon, plan ahead. If you're buying, get your borrowing capacity reassessed before you start making offers. And if you're carrying other debts, now is a good time to review them.
Not sure where this leaves you?
I can review your current loan, reassess your borrowing capacity or walk you through your options, with no obligation.
Ian Freeman | 0439 365 365 | ian@finance365.com.au
Information in this article is correct as at 29 September 2026 and is general in nature. It does not take into account your objectives, financial situation or needs. Figures are illustrative only. Please seek advice specific to your circumstances before making any financial decision.
Credit Representative Number 439731 of Australian Credit Licence 384704.