Illustration Only: What 100 Basis Points of 2026 Hikes Could Mean on a $600,000 Loan

The Reserve Bank of Australia (RBA) has raised the cash rate target four times in 2026. Governor Michele Bullock told the House of Representatives Standing Committee on Economics on 18 September that the cumulative increase for the year stood at 75 basis points. The Monetary Policy Board then added 25 basis points on 29 September, taking the target to 4.60 per cent from 30 September. Based on those RBA statements, total tightening in 2026 comes to 100 basis points, or one percentage point.

The RBA publishes the cash rate. It does not publish what that means for any individual mortgage, and nothing below comes from the RBA. What follows is an illustration, built on simplified assumptions, to show the arithmetic of a one percentage point rise on a loan of a round size.

The assumptions behind this illustration

Every number in this article depends on these assumptions. Change any of them and the results change.

• Loan size: $600,000.
• Loan type: principal-and-interest, repaid in equal monthly instalments.
• Term: 30 years (360 monthly repayments), calculated as if the full term remains at each rate.
• Assumed starting loan rate: 5.75 per cent a year. This is a hypothetical figure chosen for the illustration. It is not an RBA figure and does not represent any particular lender's rate.
• Pass-through: each cash rate change is assumed to be passed through in full to the loan rate, so 100 basis points of cash rate increases lifts the loan rate from 5.75 per cent to 6.75 per cent.
• Formula: the standard amortisation formula, P = L × r / (1 − (1 + r)^−n), where L is the loan amount, r is the annual rate divided by 12 and n is 360.

The figures have been checked with a Python calculation and are rounded to the nearest cent.

Illustration: step by step through four increases

Applying those assumptions, the monthly repayment at each stage would be:

In this illustration, the full 100 basis points adds $390.15 a month, or about $4,682 over a year. That is an increase of around 11 per cent on the starting repayment.

Each 25 basis point step adds a little more than the last, rising from $95.87 for the first step to about $99 for the fourth, because each increase applies to a higher starting rate.

How sensitive is the illustration to the starting rate? Because the starting loan rate is an assumption, it is worth showing how the result shifts if that assumption changes. Keeping everything else the same:

• With an assumed starting rate of 5.25 per cent, a 100 basis point rise lifts the monthly repayment from $3,313.22 to $3,694.30, an increase of $381.08.
• With an assumed starting rate of 5.75 per cent (the central illustration), the increase is $390.15.
• With an assumed starting rate of 6.25 per cent, the repayment moves from $3,694.30 to $4,093.06, an increase of $398.75.

Across this range, the extra cost of a one percentage point rise on a $600,000, 30-year loan sits at roughly $380 to $400 a month.

What the illustration leaves out

Real loans rarely match a tidy example. The illustration does not capture:

1. Remaining term. Most existing borrowers have fewer than 30 years left. A shorter remaining term changes the repayment, and this illustration does not model that.
2. Partial or delayed pass-through. The RBA sets the cash rate, not individual loan rates. The full pass-through assumed here is a simplification.
3. Offset balances. Bullock said on 29 September that "a lot of people have a mortgage, and then they have an offset account, which sits in the background," and that balances in them have "actually grown quite a lot over the last decade or so." Offset balances reduce the interest charged, which this illustration ignores.
4. Fixed-rate loans. The example assumes a variable rate that moves with each change.
5. Interest-only loans, fees and tax. None are included.

What the RBA itself has said about repayments

The RBA's own analysis is broader than any single loan example. Assistant Governor (Financial Markets) Christopher Kent said on 13 August that "Scheduled mortgage payments have risen and are now close to their 2024 peak as a share of household disposable income."

The October 2026 Financial Stability Review found that the share of variable-rate owner-occupiers with a cash-flow shortfall "remains relatively low at around 2 per cent", with most of those in shortfall holding savings to cover it for at least six months.

Bullock acknowledged the cost plainly: "Those who have mortgages, yes, this clearly impacts them and it hurts them." She said borrowers have "less cash flow, and they've got less money to spend on things", describing this as one of several channels of monetary policy.

The reason for the increases, in the Board's account, is inflation. Headline CPI was 4.0 per cent over the year to August 2026; underlying inflation has been about 3.5 per cent for the past six months, according to Bullock; and the trimmed mean was 3.6 per cent in the June quarter, against a 2–3 per cent target. The next decision is due at 2.30 pm on 3 November. Bullock has said: "I'm not going to give you forward guidance."

The bottom line

On the assumptions set out above, a $600,000, 30-year principal-and-interest loan starting at an assumed 5.75 per cent would see its monthly repayment rise from $3,501.44 to $3,891.59 if the 100 basis points of 2026 cash rate increases were passed through in full, an extra $390.15 a month. This is an illustration only. It is not an RBA calculation, and actual outcomes depend on each loan's rate, remaining term, offset balances and lender decisions.