September Rate Report: Cash Rate Increases to 4.60%

The Reserve Bank of Australia (RBA) has raised the cash rate for the fourth time this year; it now sits at 4.60%^[1].

The last time the cash rate was this high was November 2010, as the economy recovered from the Global Financial Crisis.
Given high inflation, global uncertainty, and Reserve Bank of Australia Governor Michelle Bullock’s recent statements^[2], the rate increase may not be surprising, but it is still disappointing, especially for homeowners who have weathered three rate increases this year already.

What is The Cash Rate?

The cash rate is the rate that the RBA charges banks and lenders to borrow funds. It’s used to control inflation and guide economic growth ^[3]. When the RBA increases the cash rate, Banks typically increase their interest rates on home loans.

Why is The Cash Rate On The Rise?

Despite households cutting back on spending, inflation is staying stubborn.

The key issue is that necessary costs are still high; food, home loans, education and health considerations have all seen increases of over 3%, when compared to this time last year.

Lower-than-expected inflation led to the RBA holding the cash rate at 4.35% in August, in the hope that inflation would return to the middle of their 2-3% target range by the end of 2027.

However, the RBA now believes the low supply and high demand of resources internationally will put unwanted pressure on inflation, forcing it to raise the cash rate.

“Although growth in the Australian economy is slowing, some of these upside risks to inflation appear to be materialising,” Ms. Bullock said. ^[4].

If You Own A Home…

Home Owners on a variable interest rate home loan will see their monthly mortgage repayments increase for the fourth time this year.  It’s frustrating, and you may feel like you have no choice in what happens with your home loan, but there are options:

• Check your loan type: If you’re on a fixed rate, rate increases won’t impact your current rate, but it’s important to know when your fixed rate period reaches an end, so you don’t automatically switch over to a higher interest rate.
• Refinance: If you haven’t looked at your loan options in a year, this should be at the top of your list. We can negotiate a more competitive loan with your lender or find another lender that better suits your needs.
• Be honest: If you’re struggling to meet repayments, the sooner you let your lender and broker know, the more they can do to support you. “Hardship variations“ are temporary changes to your repayment plan to help you navigate difficult financial periods.

The first step is reaching out to your MoneyQuest broker. Just exploring your options can make a big difference.

If You Plan to Buy…

An increase in interest rates makes a home loan more expensive.

Rate increases typically mean you can borrow less, have to pay more interest on your loan and face more hurdles. Lenders will likely look more closely at living expenses and existing debts when deciding if you’re eligible.

However, as we’re currently seeing, higher rates can lead to a cooling demand in the market, meaning house prices may flatten or drop. Speaking with your local MoneyQuest mortgage broker can have a big impact on buying a home.

Will We See Another Rate Increase in November? 

There’s no way to accurately predict what the RBA’s next decision will be; however Commonwealth Bank, NAB, ANZ and Westpac all correctly forecasted a rate increase this week^[4] and ANZ expects yet another rate hike in November.

It’s smart to be prepared for either outcome. A cash rate hold doesn’t necessarily mean your current loan is competitive, while the extra you’ll pay in the event of a rise is impacted by more than just your interest rate. Speaking with your MoneyQuest broker helps you understand what each outcome means for you, and what options you have.

[1]Reserve Bank of Australia (2025). Cash Rate Target Overview. [online] Reserve Bank of Australia. Available at: https://www.rba.gov.au/cash-rate-target-overview.html [Accessed 29 Sept. 2026].

[2] Janda, M., Hutchens, G. and Taylor, D. (2026). RBA leaders warn that interest rates are just back to “sensible level.” [online] abcnews. Available at: https://www.abc.net.au/news/2026-09-18/rba-governor-talks-interest-rates-at-parliamentary-hearing/107167676 [Accessed 22 Sept. 2026].

[3] Hobson, P. and Qiu, S. (2026). Australia’s central bank chief warns inflation risks materialising. [online] Reuters. Available at: https://www.reuters.com/world/asia-pacific/australias-central-bank-chief-warns-inflation-risks-materialising-2026-09-18/ [Accessed 22 Sept. 2026].

[4]Cecile Lefort, L.J. (2026). RBA interest rate rise in September forecast by all four big banks as ANZ, CBA join NAB and Westpac. [online] Australian Financial Review. Available at: https://www.afr.com/markets/debt-markets/anz-cba-join-two-big-rivals-in-forecasting-rba-rate-rise-next-week-20260922-p60z5a [Accessed 29 Sept. 2026].

• SHARE