What changed
On 29 September 2026, the Monetary Policy Board of the Reserve Bank of Australia decided to increase the cash-rate target by 25 basis points (0.25 percentage points), lifting it from 4.35% to 4.60%.
In its official statement (Media Release 2026-27, opens in a new tab), the RBA highlighted that inflation remains above target and several upside risks identified earlier in the year are now materialising. The Board pointed to higher global energy prices following the broadening conflict in the Middle East, surging global prices for technology hardware driven by artificial intelligence demand, and persistent domestic capacity constraints. Business liaison reports also indicated that Australian firms continue to experience cost pressures and are passing them through into retail prices.
While economic output and consumer spending have slowed gradually, domestic inflation expectations and recent price outcomes ran hotter than the central bank anticipated.
The cash rate is not your home-loan rate
When the RBA changes the cash rate, it does not directly alter anyone's home-loan contract.
The cash rate is the interest rate commercial banks pay to borrow and lend unsecured funds overnight in the money market. Commercial banks and non-bank lenders use that rate as an input to their funding costs, but they set their own variable home-loan rates independently.
When the cash rate moves, individual lenders decide three distinct things:
Pass-through amount
A lender can pass on the full 0.25 percentage points, pass on a partial amount (for example, 0.15 or 0.20 percentage points), or choose not to change variable rates at all. Lenders may also vary how much they pass on between owner-occupier and investor loans.
Effective timing
Rate changes do not take effect immediately on the day of the RBA decision. Lenders determine their own implementation schedules, with effective dates and subsequent repayment adjustments governed by each lender's loan terms and billing cycles.
Existing versus new lending
Lenders regularly apply different rate adjustments or pricing tiers to existing borrowers compared to new customer promotions.
Because of these differences, any calculation based on the assumption that an RBA decision automatically adds 0.25 percentage points to every loan in Australia is flawed. What matters to your budget is the specific rate change your lender announces for your loan.
What 0.25 percentage points looks like in dollars
Percentage points are abstract; household budgets operate in dollars.
To understand what a 0.25 percentage-point increase actually means, we ran the numbers through figuresmate's standard home-loan calculation engine across representative loan balances.
Assuming a borrower currently paying 6.20% on a principal-and-interest loan with 25 years remaining sees their lender pass on the full 0.25 percentage points (lifting the rate to 6.45%), here is how monthly repayments change:
| Loan balance | Current repayment (6.20%) | New repayment (6.45%) | Monthly increase | Annual increase |
|---|---|---|---|---|
| $300,000 | $1,969.75/mo | $2,016.26/mo | +$46.51/mo | +$558.12/yr |
| $600,000 | $3,939.49/mo | $4,032.52/mo | +$93.03/mo | +$1,116.36/yr |
| $900,000 | $5,909.24/mo | $6,048.78/mo | +$139.54/mo | +$1,674.48/yr |
Because repayments scale directly with principal, a $600,000 balance experiences approximately double the dollar increase of a $300,000 balance (subject to nearest-cent rounding on each repayment):
- On a $300,000 balance, the monthly payment increases by +$46.51 (+$558.12 a year).
- On a $600,000 balance, the monthly payment increases by +$93.03 (+$1,116.36 a year).
- On a $900,000 balance, the monthly payment increases by +$139.54 (+$1,674.48 a year).
Why the remaining term matters
Two borrowers with the exact same $600,000 balance facing the same 0.25 percentage-point rate rise will not see the same dollar increase in their monthly payment if their remaining loan terms differ.
The table below compares the repayment impact on a $600,000 loan moving from 6.20% to 6.45% across different remaining terms:
| Remaining term | Current repayment (6.20%) | New repayment (6.45%) | Monthly increase | Annual increase |
|---|---|---|---|---|
| 30 years | $3,674.81/mo | $3,772.70/mo | +$97.89/mo | +$1,174.68/yr |
| 25 years | $3,939.49/mo | $4,032.52/mo | +$93.03/mo | +$1,116.36/yr |
| 20 years | $4,368.10/mo | $4,455.79/mo | +$87.69/mo | +$1,052.28/yr |
| 15 years | $5,128.20/mo | $5,210.17/mo | +$81.97/mo | +$983.64/yr |
This outcome is counter-intuitive for many borrowers: a loan with 30 years remaining sees a larger monthly repayment increase (+$97.89/month) than a loan with 15 years remaining (+$81.97/month).
The explanation lies in amortisation mathematics:
On a loan with 30 years remaining, interest comprises the majority of early monthly repayments (around 84% of the next $3,674.81 repayment in this example, with $574.81 going to principal). Because the principal balance amortises more slowly over a longer remaining term, a higher proportion of debt remains subject to the interest rate for longer, producing a larger monthly repayment adjustment.
By contrast, on a loan with only 15 years remaining, a substantially larger proportion of every contractual payment goes towards principal reduction. Although the total monthly payment is higher (because the same balance is repaid over half the time), the sensitivity of that repayment to interest rate adjustments is lower.
Calculate the change on your own loan
Broad industry averages and benchmark scenarios can only give an approximate indication. To see the exact dollar impact on your own budget, check your loan details directly.
We built a dedicated tool specifically for this calculation: the Home loan rate change calculator.
To run the calculation, you need four figures from your latest loan notice:
- Remaining loan balance: the current principal amount you owe.
- Remaining term: the number of years left on your loan contract.
- Current interest rate: the annual interest rate you pay today.
- Lender rate change: the increase or decrease announced by your lender, expressed in percentage points (for example, +0.25).
The calculator immediately derives your new rate and shows the repayment difference per month, per fortnight, and per week, as well as the total annualised difference. It also supports rate cuts, so it remains useful when rates fall.
Methodology and transparency
All calculations on figuresmate follow standard Australian banking conventions:
- The periodic interest rate is calculated as the annual nominal rate divided by the number of repayment periods in a year (12 for monthly, 26 for fortnightly, 52 for weekly).
- Periodic repayments are calculated using the standard annuity amortisation formula and rounded to the nearest cent.
- All calculation logic runs directly in your browser. figuresmate does not collect your loan balances or personal data, and we do not earn referral fees, affiliate commissions, or advertising revenue from any lender or mortgage broker.
To explore broader scenarios – such as extra repayments, interest-only periods, or year-by-year amortisation curves – use our comprehensive Home loan repayments calculator.