For Australians on variable home loans, the Reserve Bank's fifth rate rise of 2026 raises a practical question about how much more the monthly bill could grow, and how much room households have left.

Variable-rate borrowers woke up on Melbourne Cup Day to another increase in the cost of money. At 2.30 pm AEDT on 3 November 2026, the Monetary Policy Board announced it had lifted the cash rate target by 25 basis points, from 4.60% to 4.85%, effective from 4 November.

In the words of the Board's statement: "At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.85 per cent."

For households with a Loan that moves with the market, this is the latest in a run of changes. The RBA has now raised the cash rate in February, March, May, September and November, a cumulative increase of 125 basis points across 2026.

The decision was not unanimous. Six members of the Board voted to raise the rate and three voted to hold it at 4.60%. That contrasts with September, when the 25-basis-point increase from 4.35% to 4.60% was agreed unanimously.

Why the Board moved again

The case laid out in the statement centres on inflation. "Inflation remains elevated and recent data indicate that it is broadly based," the Board said, adding that "there is an increasing risk that higher Inflation expectations will become embedded."

Two measures matter here, and they are not the same thing:

  • Headline CPI, measured monthly, rose 4.3% over the year to September 2026, up from 3.5% in July and 4.0% in August.
  • Trimmed-mean inflation, the RBA's preferred underlying measure, was 3.7% over the year to the September quarter and 1.0% in the quarter itself (seasonally adjusted).

Both sit above the 2–3% target band. The November Statement on Monetary Policy (SMP), released alongside the decision, forecasts headline inflation of 4.5% by December 2026 and trimmed mean of 3.6% at the same point. These are forecasts, not outcomes, and the RBA itself stresses heightened uncertainty. According to the statement, inflation is not expected to reach the top of the target range until late 2027, about three quarters later than previously forecast.

The Board also acknowledged the strain building in the economy: "The economy is slowing, housing prices have fallen significantly and the Unemployment rate has risen." Even so, it concluded that the inflation risk warranted a further rise, saying it "will continue to do what it considers necessary to bring inflation sustainably back to target."

What it could mean for a monthly repayment

The RBA does not set Mortgage rates. Lenders decide how much of any cash rate change they pass on, and when. To give a sense of scale only, the following is a hypothetical illustration. The lender rates are invented for the example and are not RBA figures.

Consider a $600,000 principal-and-interest loan over 30 years (360 monthly payments):

  • At a hypothetical rate of 6.00%, repayments would be about $3,597.30 a month.
  • At a hypothetical rate of 6.25%, repayments would be about $3,694.30 a month.

In this illustration, a 0.25-point rise adds about $97.00 a month. It assumes the lender passes on the full increase, which is not guaranteed. Individual outcomes depend on loan size, remaining term, the rate charged and whether a borrower is ahead on repayments.

How much room do households have?

The RBA has spent considerable effort in recent weeks examining whether borrowers can cope. The picture it paints is one of strain but, so far, not widespread distress.

The minutes of the September meeting recorded that scheduled mortgage payments were about 10% of household disposable income, around their 2024 peak. Fewer than 2% of owner-occupier borrowers had a Cash Flow shortfall. Median savings buffers were just under one year of scheduled repayments for borrowers in the lowest income quintile and almost two years for those in the highest. The minutes also noted that very few borrowers would be in Negative equity even if housing prices fell 20%.

Deputy Governor Andrew Hauser offered a similar assessment at a Citi conference in Sydney on 21 October, noting that about 2% of mortgages were in Negative cash flow and that the median mortgagee holds over a year of buffers.

The October Financial Stability Review struck a cautiously reassuring tone: "Most Australian households with mortgages remain well placed to manage more difficult conditions." It added that "Australian banks are well positioned to continue lending, even in a downturn."

Those observations, however, were made before today's increase. Averages and medians can also mask pockets of pressure. A household with a large loan relative to income, a recent purchase or limited savings may feel the change more sharply than the typical borrower.

The wider squeeze

Mortgage costs are not the only pressure on household budgets. The RBA has pointed to higher fuel and Commodity prices linked to the conflict in the Middle East as one driver of inflation. Hauser said oil was above $100 a barrel, about a third higher than the August assumption.

The labour market is also softening. The SMP forecasts unemployment rising from 4.4% in June 2026 to 4.7% by December 2026 and 5.1% by December 2028. The statement noted that "the unemployment rate is projected to rise by more than expected in the August forecasts", although employment is still expected to keep growing.

For borrowers, that combination of higher repayments, elevated living costs and a cooling jobs market is the backdrop to the coming months. Hauser put the RBA's position plainly: "We need a period of below-trend growth to bring inflation down, and we're seeing that happening."

The bottom line

The cash rate now sits at 4.85%, after a 6–3 vote and a fifth increase for 2026. How much variable-rate borrowers pay will depend on what their lender does, but the hypothetical illustration above suggests a quarter-point rise on a $600,000 loan could add roughly $97 a month if passed on in full. RBA and Financial Stability Review data indicate most mortgage holders entered this period with buffers, though those figures predate today's move. The next decision is due at 2.30 pm on 8 December 2026. Borrowers unsure how changes affect them can consider speaking with a licensed adviser or their lender.