The RBA cash rate has risen to 4.60% after the Reserve Bank of Australia increased rates by 25 basis points at its September 2026 monetary policy meeting.
The increase, announced on 29 September and effective from 30 September, takes the cash rate from 4.35% to 4.60%. It is the fourth 0.25 percentage point increase this year, following rises in February, March and May. Reserve Bank of Australia
For Australian mortgage holders, another cash rate rise puts the spotlight firmly back on home loan interest rates and repayments.
So, why did the RBA raise rates again, and what could it mean for your mortgage?
Why Did the RBA Raise the Cash Rate to 4.60%?
The short answer is inflation.
In its September statement, the RBA said inflation remained elevated and that some of the upside risks it had previously identified were materialising.
The Board pointed to higher global energy prices, the ongoing conflict in the Middle East, AI-related global demand for technology goods and continued capacity pressures within the Australian economy. Reserve Bank of Australia
The RBA also noted that recent Australian inflation and economic growth data had been stronger than expected at its previous meeting.
The Board concluded that another tightening of financial conditions was warranted to help return inflation to target within a reasonable timeframe. Reserve Bank of Australia
Inflation Remains Above the RBA’s Target
Inflation remains one of the biggest challenges facing the Reserve Bank.
The latest ABS figures show headline CPI inflation increased to 4.0% in the 12 months to August 2026, up from 3.5% in July.
Trimmed mean inflation, which attempts to provide a clearer picture of underlying inflation by reducing the influence of unusually large price movements, remained at 3.6% annually. Forex Factory
That leaves underlying inflation above the RBA’s 2–3% target range.
RBA Governor Michele Bullock said following the September decision that inflation remained too high and pointed to domestic capacity pressures, as well as additional inflationary pressure associated with the Middle East conflict. Reserve Bank of Australia
What Is Driving the RBA’s Inflation Concerns?
The RBA has highlighted several risks that could keep inflation higher for longer.
Deputy Governor Andrew Hauser recently identified three particular upside risks: the ongoing Middle East conflict, unexpectedly strong global activity associated with the AI boom and weaker supply capacity within the Australian economy. Reserve Bank of Australia
The RBA’s September statement also highlighted disruptions to global oil supplies and significantly higher energy prices.
At the same time, domestic businesses continue to report cost pressures, with some firms increasing prices or considering doing so. Reserve Bank of Australia
That combination makes the RBA’s job more complicated.
Higher interest rates are intended to slow demand across the economy and reduce inflationary pressure, but they also increase borrowing costs for households and businesses.
Four RBA Interest Rate Rises in 2026
The September decision marks the fourth cash rate increase of 2026.
The RBA’s official cash-rate history shows:
- 4 February 2026: +0.25 percentage points to 3.85%
- 18 March 2026: +0.25 percentage points to 4.10%
- 6 May 2026: +0.25 percentage points to 4.35%
- 30 September 2026: +0.25 percentage points to 4.60%
That represents a cumulative increase of 1.00 percentage point during 2026. Reserve Bank of Australia
For borrowers with variable-rate home loans, the impact can be significant if lenders pass those increases through to mortgage rates.
What Does the RBA Cash Rate Rise Mean for Home Loans?
The RBA cash rate doesn’t directly determine the interest rate on your mortgage.
However, it is an important influence on lenders’ funding costs and home loan pricing.
Following an RBA increase, individual banks and lenders decide whether to change their variable home loan rates, by how much and when.
That means borrowers shouldn’t automatically assume their mortgage rate will increase by exactly 0.25 percentage points.
It’s worth checking communications from your lender to see whether your rate is changing and when any new rate will take effect.
How Much Could Another 0.25% Rate Rise Cost?
The actual increase depends on your loan balance, remaining loan term, interest rate and repayment structure.
As a simple illustration, for a borrower with a substantial mortgage, even a relatively small increase in the interest rate can translate into hundreds or potentially thousands of dollars in additional interest over time.
Rather than relying on a generic repayment figure, it can be more useful to calculate the impact using your actual mortgage balance, loan term and lender’s new interest rate.
That’s particularly important after four cash rate increases in one year.
What Can Homeowners Do After the September RBA Rate Rise?
If your home loan rate increases, there are several areas worth reviewing.
Check your new repayment. Find out exactly when your lender’s new rate applies and what it means for your required repayments.
Review your current interest rate. Don’t assume the rate you’ve had for years is still competitive.
Use your offset effectively. If your mortgage has an offset account, keeping eligible savings there can reduce the loan balance used to calculate interest.
Consider additional repayments carefully. Extra repayments may help reduce interest over time, but maintaining an appropriate emergency cash buffer is also important.
Review your loan structure. Your rate is important, but so are fees, features, repayment arrangements and the overall structure of the mortgage.
Should You Refinance After an RBA Rate Rise?
An RBA rate increase can be a useful prompt to review your mortgage, but refinancing isn’t automatically the right answer.
A lower advertised rate doesn’t necessarily mean you’ll be better off once fees, loan features, remaining term and other costs are considered.
Your borrowing capacity may also have changed since you originally took out the loan.
The better question is:
Is your current home loan still competitive for your circumstances?
A home loan review can compare your existing mortgage with other available options and help determine whether switching lenders could make financial sense.
What Does the Rate Rise Mean for Home Buyers?
Higher interest rates can also affect people preparing to buy a property.
Lenders assess borrowers’ ability to service a mortgage using rates above the actual loan rate. As mortgage rates rise, the amount some buyers can borrow may therefore change.
If you received a borrowing-capacity estimate or pre-approval before the latest rate rises, it may be worth checking whether the numbers have changed before making an offer on a property.
Your borrowing capacity is also only one part of the picture.
Consider what repayment comfortably fits your household budget, particularly if interest rates remain elevated for longer than expected.
Could the RBA Raise Interest Rates Again?
The RBA hasn’t committed to a predetermined path for interest rates.
In its September statement, the Board said it would remain attentive to incoming data and the evolving economic outlook. It also explicitly said it could increase the cash rate further if needed to return inflation sustainably to target. Reserve Bank of Australia
That doesn’t mean another increase is certain.
Future decisions will depend on economic data and the RBA’s assessment of inflation, economic activity, the labour market and other risks.
For borrowers, trying to predict the exact next RBA move may be less useful than making sure the mortgage you have today is appropriately structured.
Has Your Home Loan Kept Up With the Market?
Four cash rate increases in one year can materially change the home loan landscape.
If your lender changes your variable rate following the September decision, it’s worth understanding exactly what that means for your repayments.
It may also be a good opportunity to review whether your existing interest rate, offset, repayment setup and other loan features are still working for you.
At Home Loans Australia, we can review your current mortgage, compare available home loan options and help you understand what the latest RBA cash rate increase could mean for your repayments.
Sometimes the most useful response to an RBA announcement isn’t trying to predict the next one. It’s making sure your home loan is ready for whatever comes next.
Frequently Asked Questions About the RBA Cash Rate
What is the RBA cash rate now?
The RBA increased the cash rate target by 25 basis points to 4.60% at its September 2026 meeting. The new rate took effect on 30 September 2026. Reserve Bank of Australia
How much did the RBA raise interest rates in September 2026?
The RBA increased the cash rate by 0.25 percentage points, or 25 basis points, from 4.35% to 4.60%. Reserve Bank of Australia
How many times has the RBA raised rates in 2026?
The September decision was the fourth cash rate increase of 2026, following 25-basis-point increases in February, March and May. Together, the four increases total one percentage point. Reserve Bank of Australia
Why did the RBA raise rates again?
The RBA said inflation remained too high and that some upside risks were materialising. It highlighted higher energy prices, the Middle East conflict, domestic capacity pressures and stronger-than-expected recent economic data. Reserve Bank of Australia
Does an RBA rate rise automatically increase my mortgage rate?
Not necessarily. Individual lenders decide whether to change their home loan rates following an RBA decision, including the size and timing of any change.
Should I refinance after an interest rate rise?
It can be worth reviewing your home loan after a rate rise, but refinancing depends on your individual circumstances. Compare the new rate, fees, loan features, remaining term and potential switching costs rather than focusing only on the advertised interest rate.
Will the RBA raise interest rates again?
The RBA has not committed to another increase. It says future decisions will depend on incoming economic data and its assessment of the outlook and risks, while noting that it could raise the cash rate further if needed.
