What an RBA Rate Move Does to Your Repayments (2026)

Every time the RBA meets, I get some version of the same question from clients: “if they move the cash rate 0.25%, what does that actually do to my repayment?” It’s a fair question, and the honest answer has more steps in it than most headlines let on.

Update, October 2026: The RBA lifted the cash rate 0.25 percentage points to 4.60% on 29 September 2026, its fourth rise this year, so the mechanics below are now flowing through to variable repayments. The next decision is due on 3 November (sources: RBA; Canstar).

Last reviewed: 22 October 2026. Figures reflect the RBA’s 29 September decision (cash rate 4.60%). I will review again after the 3 November meeting.

Here’s the mechanics — not a prediction of which way the next move goes, just what happens to your numbers once it does.

The Cash Rate Isn’t Your Rate

The RBA sets the cash rate, which is the rate banks charge each other for overnight loans. Your variable home loan rate is priced off that, plus the bank’s own funding costs and margin. When the cash rate moves, banks usually pass some or all of it through to variable rates — but not always the full amount, and not always on the same day.

Fixed-rate borrowers don’t feel a cash rate move at all until their fixed term ends. That’s the whole point of fixing — you’re trading potential downside for certainty, and vice versa.

A Quarter-Point Move Is About $90 a Month on $600,000

Take a $600,000 loan, 25 years remaining, principal and interest. A 0.25% rate change works out to roughly $90 a month either way (Canstar estimated $91 on a $600,000 loan after the September 2026 rise), depending on where in the loan term you are (more impact early, since more of your repayment is interest at that stage).

That doesn’t sound dramatic on its own. The reason people feel it more than the maths suggests is that rate moves tend to arrive in clusters, not isolation — three or four moves in a year adds up to real household budget pressure, especially stacked on top of everything else that’s gone up.

The Part People Miss: Timing

Your bank doesn’t have to move the day the RBA does, and different lenders pass changes through at different speeds. It’s worth checking your own loan’s rate change notice rather than assuming the news headline date is your date — I’ve seen clients budget around the RBA’s announcement and get caught out two or three weeks later when their actual repayment changes.

What To Actually Do About It

If you’re on variable and a rise happens

Check your new repayment amount directly with your lender rather than estimating. If it stretches your budget, this is the moment to look at whether refinancing, extending your loan term, or moving to interest-only for a short period makes sense — not six months into feeling the pinch.

If you’re deciding between fixed and variable right now

There’s no universally right answer — it depends on your risk tolerance and how tight your buffer is. I’ve written a full breakdown of that decision separately, since it deserves more than a paragraph here.

If a rise doesn’t change your budget either way

Consider directing the difference into an offset account rather than just absorbing it — it’s the cheapest insurance against the next move going the same direction.

Frequently Asked Questions

Does my bank have to pass on an RBA rate change?

No. Banks set their own variable rates and typically move in response to the cash rate, but they’re not obliged to pass on the full amount, or to do it immediately. Check your lender’s own notice rather than assuming.

How much does a 0.25% rate change cost on an average loan?

Around $90 a month on a $600,000 loan, by Canstar’s estimate after the September 2026 rise. Your own figure moves with your balance and the years you have left, so budget on the number in your lender’s notice.

Do fixed-rate borrowers feel RBA moves immediately?

No. A fixed rate is locked for its term regardless of what the cash rate does. The impact only arrives when the fixed term ends and the loan reverts to a variable rate or a new fixed term is set.

The Bottom Line

An RBA decision is a headline. Your actual repayment change depends on your lender’s pass-through, your loan structure, and where you sit in your loan term. Don’t budget off the announcement — budget off the letter your bank sends you.

Update, 29 September 2026: the cash rate moves to 4.60%

The RBA lifted the cash rate by 0.25 percentage points to 4.60%. It is the fourth rise this year and the highest cash rate since 2011. Here is how it plays out in practice.

Existing borrowers. If you are on a variable rate, your lender will pass the rise through in the coming weeks. Canstar estimates roughly an extra $76 a month on a $500,000 loan, scaled to your balance and remaining term. If you are fixed, nothing changes until your term ends, but find out now what you will roll onto. Your existing approval does not change. It was tested against a buffer above the rate at the time, which is exactly why the buffer exists.

New applicants. This is the part that catches people out. Serviceability is assessed at the new higher rate plus the buffer. Borrowing capacity shrinks, not just cash flow. A pre-approval from two months ago may come back lower when it is re-run. If you are mid-search, have that conversation before you make an offer.

If you are stretched. Walk through the options properly:

Extend the loan term to lower repayments, at the cost of more interest over time.
Move to interest-only for a defined period, if your lender allows it.
Look at consolidating other debt into the home loan, rather than juggling repayments at higher rates.

None of these is free. Ask your lender or broker to re-run your numbers this week rather than guess.

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What Actually Happens to Your Repayments When the RBA Moves