By Catherine Mulholland, Head of Client Services, Otivo
At the start of 2026, the cash rate was 3.60%. Four rate rises later, it's 4.60%, its highest level in about 15 years. For a household with a $600,000 variable-rate mortgage, a full 1 percentage point increase adds close to $400 a month. That's about $4,650 a year coming out of a budget that's already absorbing 4% inflation. Here's how the numbers work, what makes them bigger or smaller for different loans, and what another move would add.
If a lender passes on the full 1 percentage point of 2026 cash rate rises, repayments on a $600,000, 30-year principal-and-interest loan rise by about $387 a month. That's based on an illustrative rate moving from 5.6% to 6.6%. The RBA raised the cash rate to 4.60% on 29 September 2026.
How much has the cash rate risen in 2026?
The RBA raised the cash rate four times in 2026, by 0.25 percentage points each time, taking it from 3.60% to 4.60%. The most recent rise was on 29 September 2026. At the media conference that followed, Governor Michele Bullock said bringing inflation down remained the priority.
The cash rate is the rate banks pay to borrow from each other overnight. It isn't the rate on a home loan, but it heavily influences it. Lenders set their own variable rates and aren't required to match cash rate changes, though most variable rates move in the same direction.
What does a 1 percentage point rise do to repayments?
On a $600,000 loan over 30 years, principal and interest, an illustrative rate rise from 5.6% to 6.6% lifts monthly repayments from about $3,444 to $3,832. That's an extra $387 a month, or roughly $4,650 a year. The larger the loan, the larger the dollar increase, because the extra interest is charged on a bigger balance.
Illustrative monthly repayments, 30-year principal and interest
These figures are illustrative only and assume the full rise is passed on. Actual repayments depend on the loan, the lender, fees and the remaining term.
What are the three numbers that set your repayment change?
Three numbers decide how much a rate rise changes a particular mortgage. Knowing them makes any headline about rates easier to translate.
- The loan balance. A $400,000 loan rises by about $258 a month over the same 1 percentage point. An $800,000 loan rises by about $517.
- The remaining term. With 25 years left instead of 30, the same $600,000 rise adds about $368 a month rather than $387.
- How much the lender passes on. Lenders decide whether to pass on a cash rate change in full, in part, or not at all.
Fixed-rate loans are different. Repayments don't change during the fixed period, but the borrower moves onto a new rate when it ends.
What would another rate rise add?
Each further 0.25 percentage point rise on a $600,000, 30-year loan at an illustrative 6.6% would add about $100 a month if passed on in full. A 0.5 percentage point rise would add about $200.
The RBA next meets on 2–3 November 2026. In its 29 September statement, the RBA's Monetary Policy Board said it would continue to do what it considers necessary to return inflation to target, including raising the cash rate further if needed.
How do households often respond to higher repayments?
Many households start by working out their new repayment and comparing it with their budget, rather than reacting to the headline rate. Other common approaches include reviewing other debts with higher interest rates, checking whether their current rate is in line with what their lender offers new customers, and building a buffer before any further rise.
Lenders also have hardship processes for borrowers who can't meet repayments. The National Debt Helpline (1800 007 007) offers free, confidential financial counselling.
For a 36-year-old couple in western Sydney with a $600,000 loan and two children, $387 a month is roughly the cost of a weekly grocery shop. Seeing the number in those terms is often what makes it manageable to plan around.
Frequently asked questions
Do all lenders pass on cash rate rises?
Lenders set their own rates. Many pass on cash rate changes to variable rates, but the timing and size are up to each lender.
Does a cash rate rise affect fixed-rate loans?
Not during the fixed period. When the fixed term ends, the loan usually moves to a rate that reflects conditions at that time.
When is the next RBA decision?
The RBA's Monetary Policy Board next meets on 2–3 November 2026, with the decision announced at 2.30 pm on 3 November.
Can a financial advisor help with mortgage stress?
Adviser and advisor are two spellings of the same role. In Australia, only people listed on ASIC's Financial Adviser Register can use the title. Free financial counselling through the National Debt Helpline is another option for people struggling with repayments.
A rate rise is easier to plan around once it's a dollar figure rather than a percentage. Otivo's debt advice helps people find effective ways to pay down debt while covering essentials, considering repayment details, household income and expenses. Otivo Pty Ltd holds AFSL and Australian Credit Licence No. 485665.
Sources
- Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 29 September 2026 — rba.gov.au
- Reserve Bank of Australia, Media Conference, Monetary Policy Decision, 29 September 2026 — rba.gov.au
- Reserve Bank of Australia, Statement by the Monetary Policy Board (cash rate held at 3.60%), November 2025 — rba.gov.au
- Reserve Bank of Australia, 2026 Monetary Policy Board meeting dates — rba.gov.au
- ABC News, Recession talk has Australians on edge, 6 October 2026 — abc.net.au
- National Debt Helpline — ndh.org.au
- Australian Bureau of Statistics, Consumer Price Index, Australia, August 2026 — abs.gov.au
Disclaimer
The information in this communication is current as at October 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.