Rate Hike Number Four: What 4.60% Costs You, and What a Melbourne Cup Hike Would Add

At 2:30pm yesterday the Reserve Bank did what almost every economist expected and lifted the cash rate by 0.25 percentage points to 4.60%. It's the fourth hike of 2026, following February, March and May, and it takes rates to their highest level since November 2011.

The vote was unanimous. And the part worth sitting with is that the Board did it while writing, in its own statement, that "housing prices have fallen in most capital cities" and "new housing loans have declined noticeably." It saw the housing slowdown and hiked anyway.

So here's what the fourth hike actually costs you, when it will hit your account, and what a fifth hike on Melbourne Cup Day would add.

What the Board actually said

The statement was short and not especially reassuring. The Board said "inflation remains elevated and some of the upside risks flagged in August are materialising," with recent inflation outcomes "stronger than expected." The trigger was the July monthly CPI: headline inflation 3.5%, but the trimmed mean (the RBA's preferred underlying measure) stuck at 3.6%, well above the 2-3% target band.

Higher energy prices from the Middle East conflict and short-term inflation expectations that remain elevated were also flagged. On the other side of the ledger, the Board noted the labour market "eased broadly as expected." That is the tell. A softer jobs market was no longer enough to hold them back.

Governor Michele Bullock didn't pretend it was painless. "This is tough," she told reporters. "The board did not take this decision lightly." The forward guidance, though, left the door wide open: the Board will do what it considers necessary, "including increasing the cash rate target further if needed."

What 4.60% costs you

Canstar's modelling on a $750,000 owner-occupier loan puts this single hike at about $114 a month in extra repayments, and the four 2026 hikes combined at about $454 a month more than in February. Because repayment changes scale almost linearly with the loan balance, you can read your own number off the table below.

$750,000 row per Canstar; other rows scaled proportionally. Estimates only, assuming the full 0.25% is passed on to a principal-and-interest variable loan.

The other number that moved yesterday is the one buyers feel before they feel repayments. Cotality estimates the four hikes have cut borrowing capacity by almost $90,000 for a typical household since February, roughly a 9% reduction in purchasing power. Canstar's per-hike figure is about $11,200 off a single borrower on average full-time earnings and about $22,400 off a couple.

The quiet two weeks: who has passed it on

The RBA moves the cash rate. Your lender moves your rate, on its own timetable. As of Wednesday morning, the lenders that had confirmed a full 0.25% pass-through were:

• Macquarie Bank - effective 15 October
• Australian Mutual Bank, Teachers Mutual Bank, UniBank and Firefighters Mutual Bank - effective 8 October

CommBank, Westpac, NAB and ANZ had not yet announced. In May, all four passed the hike on in full, with new rates effective about two weeks after the decision. Nobody should be planning on this time being different.

The practical point is that your repayment doesn't change yesterday. It changes on your lender's effective date, and you'll usually get a letter or app notice first. That gap is a short window to get organised rather than a reprieve.

Melbourne Cup Day: what a fifth hike would add

Bond markets are pricing two more rate rises in the coming months, with the next one most likely at the 3 November meeting - Melbourne Cup Day. Betashares chief economist David Bassanese expects a move to 4.85% by then, and ANZ has 4.85% in its forecast for November. Economist Warren Hogan has flagged two more rises before year end and another in early 2027, taking the cash rate to about 5%. CBA and ANZ don't see a cut before late 2027.

On a $750,000 loan, a fifth hike would add roughly another $115-125 a month, and another five-figure slice off borrowing capacity. None of that is certain. The August monthly CPI is due today and the September quarter CPI is due in late October, and the Board has said it will be "attentive to the data." But a household budget that only works at 4.60% is now a budget that works at a rate the market thinks is temporary on the low side.

Who feels it first

The strain isn't hypothetical. Contacts to the National Debt Helpline rose 11.8% to 187,905 calls and chats in the twelve months to August, and mortgage stress is back as the top concern among callers.

Buyers feel it differently. New research from University of Sydney economist James Graham and former RBA analyst Avish Sharma estimates a standard 0.25% hike cuts home purchases by about 5% straight away and keeps around 30,000 households out of home ownership, with the effect peaking about four years later. Their finding that later hikes bite a little less than the first is cold comfort to anyone whose pre-approval was assessed in August.

The strategist's view: what to do before the letter arrives

Here's what I'd be doing in the next fortnight, depending on where you sit.

• If you hold a pre-approval: it was assessed at the old rate. Lenders re-check servicing before formal approval, so ask your broker to re-run your numbers now, not the week of the auction. Finding out you've lost $20,000 of capacity on the Thursday before you bid is how people overpay or walk away from a home they could have had.
• If you're on a variable rate: check whether your direct debit is set to the minimum repayment or a fixed amount you chose. If it's a fixed amount, it may already be covering the rise, or it may quietly fall short. Then ask your lender for a rate review. Lenders still compete hard for borrowers who look ready to refinance, even in a hiking cycle.
• If your fixed term ends in the next six months: look at your revert rate now. Several lenders repriced fixed rates upward ahead of this decision, so the comparison you ran in July is probably out of date.
• If you're thinking of fixing to beat 3 November: fixed rates already price in the hikes the market expects. You're not getting ahead of the market by fixing; you're buying certainty at the market's price. That can still be worth it, but it isn't a free win.
• If the budget is already tight: call your lender's hardship team before a repayment is missed, not after. They have more options early. The National Debt Helpline (1800 007 007) is free. And if you want a quick check of how long your buffer lasts, the maths is in The Wrong Stress Test.

You can model your own position with our mortgage calculator and borrowing power estimator, or talk to us about a refinance review.