Today, at its September 2026 meeting, the Reserve Bank of Australia raised the cash rate by 0.25% to 4.60% in a unanimous decision. Read the official media release here.

Why did the RBA decide to raise the cash rate?

The RBA raised the rate because inflation is still too high and some of the risks it flagged in August have materialised.

The biggest driver is energy. The Middle East conflict has broadened and disrupted global oil supply, so fuel prices are well above what the RBA assumed in its August forecasts. Some of that is being passed through to the prices of other goods and services.

On top of that, the AI boom has created huge demand for computing power, and the RBA says this is driving rapid growth in global prices for technology-related goods.

Inflation was stronger than the RBA anticipated at its previous meeting, and growth in the June quarter was slightly stronger than forecast. Short-term inflation expectations remain elevated too.

Put together, the Board decided the three earlier increases this year hadn’t done enough. It wants demand to stay subdued for a while so pressure on the economy’s capacity eases and inflation returns to target in a reasonable time, without becoming embedded.

What will the 4.60% cash rate mean for home owners and new borrowers?

Lenders decide for themselves whether and when to pass the increase on, but typically, most pass on the full 0.25%, usually within a few weeks. Here’s what it generally means:

Existing home owners

• Variable rate loans: Repayments will likely rise. As a rough guide, 0.25% adds about $80 a month on a $500,000 loan and about $97 a month on $600,000 (over a 30-year term).
• Fixed rate loans: Nothing changes until the fixed term ends. It’s worth knowing when that date is and what rate you might roll onto.
• Ahead of the curve: With the RBA saying more increases are possible, it’s a good time to check your rate against what’s on offer, look at refinancing, and make use of any offset account you have.

New borrowers and buyers

• Borrowing power: Lenders assess you at a buffer above the actual rate, so a 0.25% increase typically trims borrowing capacity by roughly 2-3%. It’s worth confirming your number before you start bidding.
• Repayments: Higher rates mean higher repayments on the same loan size, so some buyers may look at slightly lower price ranges.
• The upside: Prices have fallen in most capital cities and new loans have slowed, so buyers may have more room to negotiate and less competition than in recent years.

The bigger picture

The RBA has said it will lift rates further if needed, so the situation could keep moving. Getting your finances in order now, whether that’s a pre-approval, a rate review or a look at your budget, puts you in a stronger spot whichever way things go.

These are general figures, not personal advice, since the actual impact depends on your loan, your lender and your personal situation.

As always, reach out if you need our assistance to refinance your home loan, or to help figure out what you may be able to borrow.