By Robert, Park Road Finance
29 September 2026
The Reserve Bank of Australia has increased the cash rate target by 0.25 percentage points to 4.60%, its highest level since October 2011. The Monetary Policy Board voted unanimously for the rise and said it could increase rates further if needed to bring inflation back to target.
The reason is straightforward: inflation is proving harder to contain than the RBA expected. Higher global oil prices are adding to fuel costs, and some of those costs are flowing through to other goods and services. Australian inflation and economic growth have also been stronger than the RBA expected at its previous meeting. Businesses continue to report cost pressures and plans to raise prices.
The RBA can see signs that higher rates are slowing the economy. Consumer spending is easing, new housing lending has fallen noticeably, and housing prices have declined in most capital cities. Labour market conditions have also eased. The Board judged that these changes have not yet done enough to bring inflation under control.
What does this mean for your home loan?
A higher cash rate does not change every mortgage rate immediately. Each lender decides whether to change its variable rates and when the change takes effect. Fixed rate borrowers generally keep their agreed rate until the fixed period ends.
As a guide, if a lender passes on the full 0.25 percentage point increase, repayments on a $600,000 principal and interest loan with 25 years remaining would rise by about $97 a month, assuming the rate moves from 6.00% to 6.25%.
If your repayments are already tight, check your lender’s rate and the date any change will take effect. It is also a sensible time to review your loan structure and compare your current deal with the available options. A lower advertised rate alone does not establish that refinancing will save you money: fees, loan features and the remaining loan term matter too.
The RBA’s message is that inflation remains its priority. Future decisions will depend on incoming data, so borrowers should plan for the possibility of further rate changes without assuming another increase is certain.
If you would like a review of your current loan, contact Park Road Finance.
General information only. This does not take account of your objectives or financial circumstances. Repayment figures are illustrative and your lender’s rates and loan terms may differ.