A hypothetical worked example shows how a 0.25 percentage point rise in a lender's variable rate could flow through to monthly repayments – an illustration only, using made-up lender rates, not RBA figures.

When the cash rate target moves, the question many households ask is simple: what does it mean for my repayments? The Reserve Bank's Monetary Policy Board lifted the target by 25 basis points to 4.85% on 3 November 2026, effective 4 November. Lenders set their own Mortgage rates, however, and decide for themselves whether and when to pass on changes.

To show the mechanics, this article uses a hypothetical example. The loan, the interest rates and the results below are illustrative only. They are not RBA figures, they are not drawn from any real lender, and they are not a forecast of what any borrower will pay.

The illustration, step by step

The example assumes a $600,000 principal-and-interest Loan over 30 years, repaid in 360 monthly instalments. It assumes the lender passes on any change in full, which is not guaranteed.

At a range of hypothetical lender rates, the monthly repayment works out as follows:

  • At 5.00%: $3,220.93 a month
  • At 5.75%: $3,501.44 a month
  • At 6.00%: $3,597.30 a month
  • At 6.25%: $3,694.30 a month

In this illustration, a 0.25 percentage point rise in the hypothetical lender rate from 6.00% to 6.25% adds about $97.00 a month to repayments. That is the figure in the headline. For comparison, the same 0.25 point step from 5.75% to 6.00% adds about $95.86 a month in this illustration, showing that each quarter-point step costs slightly more in dollar terms as the rate climbs. Note also that the hypothetical lender rates sit well above the 4.85% cash rate target; the two are different things.

The cumulative picture is larger. In 2026, the cash rate target has risen by a total of 125 basis points across five increases. Applying a 1.25 percentage point rise to the same hypothetical loan, from a lender rate of 5.00% to 6.25%, adds about $473.37 a month – again assuming full pass-through, and again purely as an illustration.

Actual outcomes depend on many things this example leaves out, including the borrower's actual rate, remaining loan balance and term, whether the loan is fixed or variable, any offset or redraw balances, and how the lender chooses to respond.

Why the cash rate rose again

The illustration only makes sense alongside the reason for the move. The Board's statement says: "Inflation remains elevated and recent data indicate that it is broadly based." It also warns that "there is an increasing risk that higher Inflation expectations will become embedded."

The latest data on the RBA's inflation pages show two distinct measures. Monthly headline CPI was 4.3% in the year to September 2026. The trimmed mean, the RBA's underlying measure, was 3.7% over the year to the September quarter, and 1.0% in the quarter itself. Both are above the 2–3% target.

The November Statement on Monetary Policy forecasts headline inflation of 4.5% in the year to December 2026. Those are forecasts, not outcomes, and the RBA notes heightened uncertainty.

The vote was split: six members supported the increase, while three preferred to hold the cash rate at 4.60%.

Where households stood before the rise

The RBA's own analysis gives some context for how borrowers were placed going into the November decision. 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 the lowest income quintile and almost two years for the highest.
  • Very few borrowers would be in Negative equity even if housing prices fell 20%.

Deputy Governor Andrew Hauser said on 21 October that about 2% of mortgages were in Negative cash flow and the median mortgagee held over a year of buffers. He also noted that about 15% of renters were in negative cash flow – a reminder that mortgage holders are not the only households under pressure.

The October 2026 Financial Stability Review concluded: "Most Australian households with mortgages remain well placed to manage more difficult conditions."

These are aggregate figures. They describe the system as a whole and say nothing about the circumstances of any individual household.

The wider backdrop

The RBA acknowledges that higher rates are weighing on the economy. "The economy is slowing, housing prices have fallen significantly and the Unemployment rate has risen," the statement says. The SMP forecasts unemployment rising to 4.7% by December 2026.

Assistant Governor Sarah Hunter said on 25 October: "We're not trying to put people out of their homes." She added: "We're not trying to achieve a sharp stop or a really big downturn or anything like that."

The next decision is due at 2.30 pm on 8 December 2026, with the next monthly CPI update on 25 November. The SMP's forecasts assume a cash rate path drawn from market pricing as at 28 October, averaging 4.9% for 2026/27. That is an assumption, not an RBA commitment.

The bottom line

In this hypothetical illustration, a 0.25 percentage point rise in a lender rate from 6.00% to 6.25% adds about $97.00 a month to a $600,000, 30-year loan, and a 1.25 point rise from 5.00% adds about $473.37 – assuming full pass-through, which is not guaranteed. The figures are illustrative, use made-up lender rates and are not RBA numbers. Borrowers wanting to understand how the change affects their own loan can consider speaking with a licensed adviser or their lender.