Another rate rise: what happened
On 29 September 2026, the Reserve Bank of Australia’s Monetary Policy Board lifted the official cash rate by 25 basis points, taking it from 4.35% to 4.60%. It is the fourth increase since the start of the year, and the Board’s decision was unanimous.
For many households and business owners, this is the moment the cumulative weight of rising rates really starts to be felt. Four rises in a single year is significant, and most lenders are expected to pass the increase on to variable rate customers within days. Below, we unpack why the RBA acted, what it is signalling about the months ahead, and, most importantly, the practical steps you can take right now to protect your cash flow.
Why the RBA moved again
The short answer is that inflation is proving stubborn. Annual trimmed mean inflation, the RBA’s preferred measure, held at 3.6% in the 12 months to July 2026 according to the Australian Bureau of Statistics. That is unchanged from June and still well above the RBA’s 2 to 3% target band.
In its statement, the Board explained that “some of the upside risks flagged in August are materialising.” It pointed to three main pressures. First, the conflict in the Middle East has broadened, and global energy prices are now much higher than the RBA had assumed only a month earlier. Higher fuel costs are already flowing through to the prices of other goods and services. Second, the global boom in artificial intelligence is driving rapid growth in prices for technology-related goods. Third, the Australian economy is still running close to its capacity limits, with weak productivity growth constraining how fast it can grow without adding to inflation.
The RBA’s business liaison program adds another warning sign. The Board noted that firms are experiencing cost pressures and “are either increasing the prices of their goods and services or looking to do so.” RBA Deputy Governor Andrew Hauser echoed these concerns in a recent interview, singling out the Middle East conflict, the AI boom and the economy’s weaker-than-expected supply capacity as the key risks pushing inflation higher.
Governor Michele Bullock was equally direct in her recent address to parliament, stating that “inflation is too high” and that the Board’s focus is on “making sure that it does not become embedded into price and wage-setting decisions.” That is the central concern: the longer inflation stays above target, the more it shapes the expectations of businesses and workers, and the harder it becomes to bring back down.
Is the economy slowing?
The RBA acknowledges that it is, at least in parts. The Board noted that consumer spending growth is easing gradually, housing prices have fallen in most capital cities, and new housing loans have declined noticeably. Labour market conditions have also eased broadly as expected. However, business investment and debt growth remain strong, and output growth in the June quarter was a little stronger than forecast.
In the Board’s own words, the three earlier increases this year “have tightened financial conditions and the economy appears to be slowing. But inflation is still too high.”
What comes next?
The RBA has not ruled out further increases. The Board stated it will “continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed.” With the Middle East conflict unresolved and energy prices elevated, borrowers would be wise to plan on rates staying higher for some time rather than counting on relief in the near term.
What this means for your repayments
As a rough guide, a 0.25% rise adds around $15 to $17 per month for every $100,000 borrowed on a typical 30-year principal and interest loan. On a $600,000 mortgage, that is roughly $100 more each month from this rise alone, and around $400 more per month when all four of this year’s increases are combined. Your exact figure will depend on your balance, rate, loan term and how your lender passes on the change.
If you are self-employed or run a business, the impact often runs wider than the home loan. Variable rate business loans, overdrafts and some equipment finance facilities will also be repriced, putting pressure on both household and business cash flow at the same time. That is why it pays to look at your whole financial picture, not just one loan in isolation.
Four ways to take back control
You cannot control the cash rate, but you can control how your finances are set up to absorb it. Here are four conversations worth having now rather than later.
1) Check that your rate is still competitive
Lenders rarely reward loyalty. It is common for existing customers to pay noticeably more than the rates offered to new borrowers with the same lender. A rate review can reveal whether your lender will sharpen its pricing, or whether a refinance could deliver meaningful savings once fees and costs are weighed up. Even a modest reduction can go a long way towards offsetting this latest rise.
2) Restructure your loan for repayment relief
There are often more options than people realise. Depending on your circumstances, these might include extending the loan term to lower monthly repayments, moving to interest-only repayments for a defined period, splitting the loan between fixed and variable portions for greater certainty, or making better use of an offset account. Each option carries trade-offs, including paying more interest over the life of the loan, so it is important to weigh them carefully against your longer-term goals.
3) Consolidate and simplify your debts
Credit cards, personal loans and car loans typically carry much higher rates than a home loan. For some borrowers, bringing these debts together into a more manageable structure can reduce the total monthly outgoings considerably. Business owners may also benefit from reviewing how personal and business borrowing is structured so each facility is doing the right job.
4) Book a budget health check
Sometimes the fastest relief comes from the spending side of the ledger. A budget health check takes a clear-eyed look at where your money is going each month, highlighting subscriptions, insurances, utilities and discretionary spending that could be trimmed or renegotiated. Small changes across several categories can add up to hundreds of dollars a month, giving you breathing room and peace of mind.
Let’s talk: book your free mortgage review
Rising rates are unsettling, but you do not have to navigate them alone. At Captiva Finance, I offer a free, no-obligation consultation to review your current loan, compare it against what is available across our panel of lenders, explore restructuring options and run through a budget health check with you. Whether you are a homeowner, an investor or a self-employed business owner juggling both personal and business finance, we will work through your options together and put a clear plan in place.
The sooner we talk, the more options you are likely to have. Get in touch today: