Key Highlights

  • Five 25-basis-point rises add up to 125 basis points this year.
  • The worked example uses a hypothetical $750,000 mortgage.
  • The effect on repayments depends on the lender and the Loan structure.
  • Households should check their own loan terms rather than rely on the illustration.

Rate rises usually arrive one at a time, and each one on its own can look modest. The cash rate target went up by 25 basis points on 3 November 2026, taking it from 4.60 per cent to 4.85 per cent, effective 4 November. But this was the fifth rise of 2026, and the total since the start of the year is 125 basis points.

This article sets out a worked illustration of what a 1.25 percentage point increase can mean on a large home loan. The numbers below are hypothetical. They are not RBA figures and they do not describe any particular lender's product. Lenders set their own rates, and whether, when and by how much a rise in the cash rate flows through to a given loan is up to each lender.

How the cash rate got here

Before running any numbers, it helps to see how the year unfolded. According to the RBA's cash rate records, the target started 2026 at 3.60 per cent, the level reached after three cuts in 2025. It then rose in five steps (shown by effective date):

  • 4 February: 3.85 per cent
  • 18 March: 4.10 per cent
  • 6 May: 4.35 per cent
  • 30 September: 4.60 per cent
  • 4 November: 4.85 per cent

The Board met on 16 June and 11 August without changing the rate. So the increases were not evenly spaced, but by November they added up to 125 basis points. The latest decision was made by majority, with six members voting to raise the rate and three voting to keep it at 4.60 per cent.

The illustration, step by step

The illustration uses a $750,000 principal-and-interest loan over 30 years, repaid monthly. It begins at a hypothetical Interest Rate of 5.00 per cent and then adds 25 basis points five times, to reach a hypothetical 6.25 per cent. The 5.00 per cent starting point is chosen only to make the arithmetic easy to follow. It is not a claim about what any borrower was actually paying at the start of the year.

Illustration: monthly repayments on a hypothetical $750,000, 30-year loan

  • At 5.00 per cent: $4,026.16
  • At 5.25 per cent: $4,141.53 (up about $115.37)
  • At 5.50 per cent: $4,258.42 (up about $116.89)
  • At 5.75 per cent: $4,376.80 (up about $118.38)
  • At 6.00 per cent: $4,496.63 (up about $119.83)
  • At 6.25 per cent: $4,617.88 (up about $121.25)

Across all five steps, the hypothetical repayment goes up by about $591.72 a month. That is roughly 15 per cent more than the starting repayment in this illustration.

The increments get slightly bigger with each step. The first quarter-point adds about $115 a month and the fifth adds about $121. This happens because of how amortising loans work: at a higher rate, more of each payment goes to interest, so each further increase costs a bit more than the one before. The difference is small for any single step, but it adds up across five.

What the illustration does and does not show

This example changes only the interest rate and holds everything else fixed. It leaves out:

  • Pass-through. The illustration assumes each cash rate rise is passed through in full to the loan rate. That is a simplifying assumption, not a description of lender behaviour, because lenders make their own pricing decisions.
  • Timing. Repayments on real loans may adjust with a lag after a rate change, depending on the lender and loan terms.
  • Loan type. Fixed-rate borrowers are not affected until their fixed period ends. Interest-only loans and loans with offset balances behave differently from the plain principal-and-interest case used here.
  • Loan balance. A borrower several years into a loan will have a smaller balance and fewer years remaining, so the dollar change would differ.

Why the RBA says it kept going

The Board's reasons for the latest rise focus on Inflation rather than on borrowers' repayments. The Monetary Policy Board's statement said: "Inflation remains elevated and recent data indicate that it is broadly based." The majority judged that "there is an increasing risk that higher inflation expectations will become embedded." and that "a further tightening in financial conditions is warranted to support the return of inflation to target."

The inflation data behind that judgement need to be read carefully. Headline monthly CPI inflation was 4.3 per cent in the year to September 2026. In the September quarter, headline CPI inflation was 3.9 per cent in year-ended terms. Trimmed-mean (underlying) inflation, which the RBA watches closely, was 3.7 per cent over the year to the September quarter. It rose 1.0 per cent in that quarter, up from 0.8 per cent in the June quarter.

The statement also says that "The increases in the cash rate target since the beginning of the year have tightened financial conditions." Bigger Mortgage repayments are one way households feel that tightening, though the statement does not set out loan-level calculations.

The RBA's November Statement on Monetary Policy describes households as already under pressure. Household consumption is a key drag on growth, and the consumption outlook has been revised lower. The RBA forecasts household consumption growth of 1.4 per cent over the year to December 2026, and real household Disposable Income growth slowing to 1.0 per cent by December 2026. The RBA's October Financial Stability Review found that most borrowers are well placed for softer growth and lower housing prices, with positive Equity and large savings buffers. That is an aggregate assessment, not a statement about any individual household.

Whether the cash rate rises further is uncertain. The RBA's forecasts assume a cash rate path based on market pricing as at 28 October 2026. That path implies a rise of about 35 basis points by mid-2027 before it stabilises at 4.8 per cent in 2028. This is market pricing, not an RBA promise. The Board's next decision is due on 8 December 2026.

The bottom line

Five quarter-point rises add up to 125 basis points. In this hypothetical illustration, that is enough to lift monthly repayments on a $750,000, 30-year loan from about $4,026 to about $4,618, a difference of about $592. The figures show how compounding increments add up. They are not RBA estimates and do not predict what any borrower will pay, because lenders set their own rates and loan circumstances vary widely. The Board has said it will be "attentive to the data" as it weighs its next move.