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What the September 2026 rate rise means for your home loan

Christian Tucker
Oct 4
5 min read

Updated: 2 days ago

Insights from AGFB · Checked 2 October 2026 · About 5 minutes

In brief

  • On 29 September 2026 the Reserve Bank raised the cash rate target by 0.25 percentage points to 4.60%, effective 30 September. It is the fourth rise this year.

  • Lenders set their own rates. If the full rise is passed on, a hypothetical $600,000 variable loan costs about $97 more a month.

  • Fixed-rate repayments stay the same until the fixed term ends, but borrowing capacity usually falls because lenders test new loans at a higher rate.

  • If repayments are getting hard, talk to your lender early. The next RBA decision is due on 3 November 2026.

What did the Reserve Bank decide?

At its meeting on 28 and 29 September 2026, the RBA's Monetary Policy Board lifted the cash rate target from 4.35% to 4.60%. The change took effect the next day, 30 September.

It follows rises of the same size in February, March and May, with the rate held in June and August. The cash rate started 2026 at 3.60%, so it is now 1 percentage point higher than in January.

The Board said inflation remains elevated. It pointed to higher global fuel and energy prices linked to conflict in the Middle East, and to ongoing price pressures at home.

How does the cash rate reach your home loan?

The cash rate strongly influences what lenders charge, but it is not your loan rate. Each lender decides whether to pass on a change, by how much and from when, and the gap between the cash rate and loan rates moves over time.

Variable rates often move after an RBA change, though each lender chooses the timing. Your lender's notice is the document to rely on for your new rate and the date it applies, and you can ask for the new repayment amount if it isn't shown.

What could it mean for your repayments?

Here is a hypothetical example, not an offer. Take a $600,000 principal-and-interest loan with 30 years to run and monthly repayments. If its rate rises from 6.00% to 6.25%, the repayment goes from about $3,597 to about $3,694, an extra $97 a month.

That works out to roughly $16 a month for every $100,000 owed. If all four of this year's rises had been passed on in full, the same loan would have been at 5.25% in January, about $3,313 a month, so the total increase this year would be about $381 a month.

Interest-only loans feel it a little more, because the whole repayment is interest. On $600,000, a 0.25 percentage point rise adds about $125 a month.

Why borrowing capacity falls when rates rise

APRA, the banking regulator, expects banks to check that you could still meet repayments at a rate at least 3 percentage points above your actual loan rate. APRA confirmed that setting in May 2026, and it still applies.

When loan rates rise, the test rate rises with them. In our hypothetical example, a 6.25% loan is assessed at 9.25% instead of 9.00%. In a simplified 30-year calculation with the same income and expenses, that can trim the maximum loan by around 2%, or about $13,000 on a $600,000 maximum.

This matters most if you are buying soon or planning to refinance. A new loan with a different lender usually means a fresh assessment, buffer included.

On a fixed rate, or coming off one?

A fixed rate doesn't change during the fixed period, so this rise won't touch your repayment until the term ends. After that, the loan usually moves to the lender's variable rate, often called the revert rate.

Check your expiry date and ask what your revert rate will be. Compare it with your lender's other options and with other lenders, ideally a couple of months before the fixed term finishes.

Leaving a fixed loan early can mean a break fee, so ask for a written figure before deciding anything. Fixed loans may also limit extra repayments, offset or redraw, which is worth knowing when you plan your buffer.

What can you do now?

  • Find your lender's notice and write down the new rate, the new repayment and the date it starts.

  • Ask your lender whether it can offer a lower rate. Lenders may reduce a rate to keep a customer.

  • Before refinancing, add up the full cost of switching, including discharge, application and any break fees.

  • Check your offset or redraw balance and decide how much you want to keep aside for the unexpected.

  • Rework your budget with the new repayment so the change doesn't arrive as a surprise.

  • If you pay more than the minimum by direct debit, check whether your amount changes automatically.

If a rate review is on your list, our refinancing page explains how Christian compares options across lenders.

If repayments are becoming hard

Speak to your lender as early as you can, and ask for its hardship team. You can request a hardship variation, such as a change to the loan terms or a temporary pause or reduction in repayments.

Moneysmart says your lender must write to you with the outcome within 21 days. Have your loan details ready, and be clear about what has changed and what you can manage.

The National Debt Helpline, which Moneysmart refers people to, offers free and confidential financial counselling on 1800 007 007. If your lender declines a hardship request and you can't resolve it with them, the Australian Financial Complaints Authority (AFCA) offers free, independent dispute resolution.

Could rates change again?

The Monetary Policy Board next meets on 2 and 3 November 2026, with the decision due on 3 November. The final meeting of the year is on 7 and 8 December.

Rates could rise, hold or fall from here, and nobody can say for certain which. Building a little headroom into your budget now is usually easier than reacting after the next notice arrives.

Common questions

Will my lender pass on the full rise?

Not necessarily. Each lender decides for itself, and the change can differ between products. Your lender's notice is the reliable guide for your loan.

Should I fix my rate now?

It depends on your situation. A fixed rate gives certainty for a set period, but it may limit extra repayments, offset or redraw, and break fees can apply. Some borrowers split the loan between fixed and variable.

Will this affect a pre-approval I already have?

It can. Pre-approval is usually conditional and time-limited, and lenders generally review the application again before formal approval. Check the expiry date and ask whether the amount still stands.

Try the numbers

Use our Repayments calculator to see your own figures at a few different rates, and the Borrowing Capacity calculator for an indicative idea of what you may be able to borrow now. Not sure where to start? Find Your Next Step asks a few short questions and points you to the right tool or enquiry.

Talk it through

If you'd like a second opinion on your rate or your options, Christian can work through it with you.

Sources

General information only. This article does not take into account your objectives, financial situation or needs. Your full financial situation and requirements must be considered before any offer or acceptance of a loan product. All lending is subject to the lender's assessment and criteria, and fees and charges apply. Figures and rules are correct as at the checked date shown and can change.

Avantgarde Financial Brokerage Pty Ltd, Corporate Credit Representative 580346, authorised under Australian Credit Licence 389328 held by Connective Credit Services Pty Ltd.

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