Rates Just Rose to 4.60%: What Changes on 9 October and What to Do Now
The RBA lifted the cash rate to 4.60% on 29 September, the fourth rise of 2026. The big four pass it on from 9 October. Here is the real cost and your next steps.
It happened. On Tuesday 29 September the Reserve Bank of Australia raised the cash rate by 0.25 percentage points, from 4.35% to 4.60%. All nine members of its Monetary Policy Board voted for it.
That is the fourth rise of 2026, after February, March and May, and it leaves the cash rate at its highest level since 2011. Within a day, all four big banks said they would pass the full 0.25% on to variable home loan customers.
Here is what actually changes, what a year of rises adds up to in dollars, and the short list of things worth doing this week.
Why the Reserve Bank moved
In one line: inflation is not coming down fast enough.
The Board pointed to higher global energy prices as the conflict in the Middle East has broadened, pushing fuel costs well above what it assumed in August. It also flagged pressure on technology prices linked to the AI boom, and an economy still running close to capacity.
The next day, the Australian Bureau of Statistics confirmed the picture. Headline inflation rose to 4.0% over the year to August, up from 3.5% over the year to July, with fuel a big driver. Trimmed mean inflation, the underlying measure the Reserve Bank watches most closely, held at 3.6%. Both are well above the 2 to 3% target.
What changes, and when
The new cash rate applied from 30 September, but that is not the day your loan changes. Each lender sets its own timing.
- Commonwealth Bank, Westpac, NAB and ANZ are all lifting variable home loan rates by 0.25% from Friday 9 October.
- Your lender will tell you the new repayment amount and when it starts. The higher repayment can land a little after the new rate does.
- Fixed-rate loans do not change until the fixed period ends. The rise matters when you roll onto whatever rate is on offer then.
- Savings rates may rise too, but banks are not obliged to pass increases on to savers, and often move more slowly. Check rather than assume.
The trap: judging it by one rise
A single 0.25% move sounds small, and on its own it mostly is. But anyone on a variable loan has now absorbed four of them in eight months. If your budget was set back in January, it is already a full percentage point out of date.
Worked example: what a year of rises costs
Take a $600,000 loan with 25 years left, principal and interest, on a variable rate of 5.50% at the start of 2026. That is a monthly repayment of about $3,685.
If the lender passed on all four rises in full, the rate is now 6.50% and the repayment is about $4,051.
That is roughly $367 more a month, or about $4,400 over a year, compared with January. This latest rise alone accounts for about $93 a month of it.
Your numbers will differ with your rate, balance and term, but the rule of thumb holds up well: on a 25-year loan, each 0.25% costs about $15 a month for every $100,000 you owe. Four rises is roughly $60 a month per $100,000.
The tax angle: investors and home owners are not in the same boat
If you borrowed to buy a rental property, the interest on that loan is generally tax deductible, because it is a cost of earning rental income. That means a rate rise costs an investor less after tax than the headline suggests.
Say you have a $500,000 interest-only investment loan that goes from 6.25% to 6.50%. Your interest bill rises by $1,250 over a year. If your taxable income is between $45,001 and $135,000, your marginal rate (the tax on your last dollar) is 30% plus the 2% Medicare levy, so the extra deduction saves about $400 in tax. The real cost is around $850.
That saving does not show up in your pay unless you have arranged it. It usually arrives at tax time, when you lodge your 2026-27 return. Investors who want the benefit sooner can apply to the ATO for a PAYG withholding variation, which reduces the tax taken from each pay.
Reality check: your own home loan is not deductible
Interest on the home you live in is a private expense, so it cannot be claimed on your tax return, no matter how high rates go. Owner-occupiers wear the full cost of every rise. The quiet upside is an offset account: money sitting in it saves you interest at your full loan rate, and those savings are not taxed.
Five things worth doing this week
None of these depend on guessing what happens next.
- Read your lender's notice. Note the new rate, the new minimum repayment and the date it starts, then update your direct debit if you pay by transfer.
- If you already pay more than the minimum, consider keeping that amount the same. Your extra repayment shrinks a little, but your budget does not move.
- Ask for a lower rate. A call to your lender's retention team with a competitor's advertised rate in hand often gets a discount, and costs you nothing to try.
- Move idle cash into your offset account if you have one. Every dollar there now saves you interest at the higher rate.
- If the new repayment will not fit, call your lender before you miss one. Lenders must consider hardship requests, and options such as a temporary reduction are far easier to arrange early.
Is another rise coming?
Nobody knows, and the signals are mixed. The Board said it will do what is needed to bring inflation back to target, including raising rates further if required. At the same time, the softer-than-expected trimmed mean figure for August led markets to scale back bets on a November rise.
Commonwealth Bank's economists still expect rates to stay put until mid-2027, but say a November rise is live. Two dates are worth putting in your calendar: the September quarter inflation figures on Wednesday 28 October, and the next Reserve Bank decision on Tuesday 3 November.
The best protection is the same either way: know your number. Put your loan into the mortgage repayment calculator at your new rate, then again at 0.25% higher, so a November surprise is one you have already planned for.
FAQ
When will my home loan repayments go up after the 29 September rate rise?
It depends on your lender. Commonwealth Bank, Westpac, NAB and ANZ are lifting variable home loan rates by 0.25% from 9 October 2026. Your lender will tell you the new repayment and when it starts, which can be slightly later than the rate change. Fixed-rate loans are not affected until the fixed term ends.
Can I claim my mortgage interest on tax because rates went up?
Only if the loan was used to buy something that earns assessable income, such as a rental property or shares. Interest on the home you live in is a private expense and is not deductible. This is general information, not tax advice, so check your own situation with the ATO or a registered tax agent.
What is the cash rate now?
The Reserve Bank lifted the cash rate target to 4.60% on 29 September 2026, effective from 30 September. It was the fourth 0.25% rise of 2026 and took the rate to its highest level since 2011. The next decision is due on 3 November 2026.
Run your own numbers