Interest rate rises in Australia: four in 2026, and the cost

The Reserve Bank of Australia has raised interest rates four times in 2026, taking the cash rate from 3.60% to 4.60%, the highest it has been since early November 2011. Each interest rate rise was 0.25 percentage points. On the average new home loan, the four rises add about $470 a month to repayments.

Interest rate rises in Australia in 2026

Source: Reserve Bank of Australia.

The February rise was the first since November 2023. In between, the Reserve Bank cut rates three times in 2025, to 3.60%. This year it has reversed all three cuts and gone one further.

Why the RBA raised interest rates

The Reserve Bank's answer each time was the same: inflation. Prices are rising faster than its 2 to 3 per cent target, and higher interest rates are meant to slow spending until they stop. Australia's inflation rate was 4.3% in the 12 months to September 2026, up from 4.0% in August, and underlying (trimmed mean) inflation rose 1.0% in the September quarter alone.

In its own words:

• February: inflation "picked up materially in the second half of 2025", and "some of the increase in inflation reflects greater capacity pressures". Spending and investment had grown "substantially more than expected".
• March: on top of that, "the conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation."
• May: higher fuel prices "are already adding to inflation", and there are "early signs that many firms experiencing cost pressures are looking to increase prices".
• September: "The conflict in the Middle East has broadened and global energy prices are now much higher than had been assumed in the August forecasts." It added that "AI-related demand is driving rapid growth in global prices for technology-related goods. And there remains pressure on domestic capacity."

Some of the pressure comes from Canberra's own decisions. The ABS says the 13.2% rise in electricity prices over the year to August was "largely due to the ending of Commonwealth electricity rebates", and that August's fuel price jump was partly driven by the end of federal fuel excise relief.

Ending relief puts the full cost back on households' bills, and it shows up in the inflation figures the Reserve Bank is trying to bring down. The flip side: while the relief was in place, it held those figures down, so part of this year's rise is that relief unwinding. Why your power bill is bigger.

What an interest rate rise costs your mortgage

The average new owner-occupier home loan in Australia was $731,000 in the June quarter of 2026 (ABS). Here's what this year's rises add to the monthly repayments, if the bank passes them on in full:

An Aussie Outrage calculation. Basis: a 30-year principal-and-interest loan, monthly repayments, starting from 5.5%, the average variable rate on outstanding owner-occupier loans in January 2026 (RBA table F6), with each 0.25% rise passed on in full. Your figures depend on your rate, your balance and your loan's remaining term.

That's money that can't go on groceries, rent or the power bill, which is the point: the Reserve Bank raises rates to slow spending. The September statement says the effects are showing up: "housing prices have fallen in most capital cities and new housing loans have declined noticeably."

Do the banks pass it on?

For the September rise, yes. NAB raised its variable home loan rates by 0.25% from 9 October 2026, and Macquarie raised its variable reference rates by 0.25% from 15 October. On average, the variable rate on outstanding owner-occupier loans rose from about 5.5% in January to 6.2% in August, before the September rise (RBA table F6). The government also pays more to borrow: the Reserve Bank noted in March and May that government bond yields had risen. See the interest bill on Australia's national debt.

When is the next RBA decision?

The Reserve Bank's board meets on 2 and 3 November 2026, and announces its decision on the second day. After that, the last meeting of the year is 7 and 8 December. In September, the board said it would "continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if needed." We'll update this page after each decision.

Four rate rises in eight months. The people paying for them are households with a mortgage, who are already paying more at the bowser and for power.

Has your mortgage gone up this year? Tell us what it's costing you.

Top photo: the Reserve Bank of Australia building in Sydney, August 2025 (cropped). Photo: Nick-D, CC BY-SA 4.0, via Wikimedia Commons.