RBA Cash Rate Increased To 4.60%

The Reserve Bank of Australia increased the cash rate by 0.25 percentage points to 4.60% on 29 September 2026. This is the fourth cash-rate increase of 2026, after increases in February, March and May and holds in June and August.

Why Did The RBA Increase The Cash Rate In August 2026?

The RBA increased the cash rate to 4.60% because inflation remains too high and the Board has become more concerned that some of the upside risks to inflation are materialising.

The key pressures the RBA has been monitoring include:

• Inflation remaining above target. The RBA has repeatedly said underlying inflation is still too high and is taking longer than desired to return sustainably to its 2–3% target.
• Persistent capacity pressures in the Australian economy. Demand has remained stronger than the economy’s supply capacity in some areas.
• Higher oil and energy costs. The continuing Middle East conflict has kept oil prices elevated, creating a risk that higher fuel and transport costs flow through into a broader range of prices.
• Inflation expectations. The RBA is particularly concerned about high inflation becoming embedded in household and business expectations.

The RBA’s August decision explicitly said further increases remained possible if upside risks materialised. Then, on 22 September, Governor Michele Bullock said the conflict had lasted longer than initially expected, oil prices remained elevated and there still appeared to be excess demand in the economy.

Our Experts Take On The Board's Decision

Here is what our experts say about the cash rate decision and what it means for borrowers.

Existing borrowers should check whether their home loan rate is still competitive, particularly if their circumstances have improved since they originally took out the loan. Prospective buyers should also reassess their borrowing power because a higher interest-rate environment can change how much they can comfortably afford.

Sid Bajracharya, Mortgage Broker

The immediate issue for mortgage holders is cashflow. If the higher rate is going to make repayments uncomfortable, this is a good time to review the structure of the loan rather than simply wait for rates to change again. Depending on the borrower, that could include comparing variable and fixed options or looking at other ways to manage repayments.

Jonathan Preston, Mortgage Broker

What Could The 0.25% Cash Rate Rise Mean For Your Mortgage?

A higher RBA cash rate does not automatically change your mortgage rate on the same day. Your lender decides whether to change its variable rates, by how much and when the new rate takes effect.

If your lender passes on the full 0.25-percentage-point increase, your variable interest rate could increase by the same amount. The effect on your repayment will depend on your outstanding loan balance, remaining term, repayment type and current interest rate.

Use the RBA Cash Rate Change Calculator below and enter +0.25% to estimate the change to your monthly repayment.

5 Things To Do After The RBA Increased Cash Rate On September 2026

• 1. Check what your lender actually does: A 0.25% RBA increase does not necessarily mean your mortgage rate changes by exactly 0.25% or immediately.
• 2. Calculate your repayment using your new home loan rate: Don’t add 0.25% to your repayment itself. Add it to your interest rate and recalculate the repayment.
• 3. Recheck your borrowing power if you’re buying: Higher rates can affect both actual repayments and lender serviceability calculations, so an older pre-approval may no longer reflect your position.
• 4. Check whether your existing rate is still competitive: If you haven’t reviewed your mortgage recently, compare your rate, fees and loan features with alternatives. Borrowers who originally needed a specialist lender may also find their options have changed as their circumstances have improved.
• 5. Address cashflow pressure early: If higher repayments are becoming difficult, speak with your lender or broker before missing repayments. Different loan structures may help some borrowers, but changes such as extending the loan term or switching temporarily to interest-only repayments can increase the total interest paid.

How The RBA Cash Rate Affects Interest Rates

Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers.

When the RBA raises the cash rate, lenders often increase their variable interest rates. This means your mortgage repayments go up.

When the RBA cuts the cash rate, lenders may lower interest rates. So, your repayments could go down. However, note that not all lenders pass on the full change.

If the cash rate is unchanged, your repayments usually stay the same. However, lenders can still change rates for other reasons.

Use our rate change calculator to find out what your repayments should look like whenever the cash rate changes.

Upcoming RBA Monetary Policy Board Meeting Calendar 2026

Source: rba.gov.au