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RBA Raises Cash Rate to 4.60%, Highest Since 2011, Impacting Borrowers and Savers

On September 29, 2026, the Reserve Bank of Australia increased its cash rate by 25 basis points to 4.60%, the highest since 2011. This move aims to address ongoing inflation but will cause higher mortgage repayments and potentially better savings returns.

Timeline

  1. 2026-09-29: Reserve Bank of Australia raises cash rate from 4.35% to 4.60%.
  2. 2026-09-29: Projected increase of $276 monthly repayment on a $400,000 variable-rate mortgage due to hike.
  3. 2026-09-29: Savings account interest rates expected to rise in response to RBA's hike.

On September 29, 2026, the Reserve Bank of Australia (RBA) increased its cash rate by 25 basis points, moving it from 4.35% to 4.60%. This marks the highest level for the cash rate since 2011 and signals the RBA's ongoing effort to manage inflation within the Australian economy. The decision is part of a broader strategy to respond to persistent inflationary pressures influenced by rising global energy prices and domestic constraints in capacity. [1]

One immediate consequence of this rate increase is its impact on Australian mortgage holders, especially those with variable-rate loans. Data suggests that a borrower with a $400,000 mortgage could face an increase in monthly repayments by approximately $276, reflecting the higher borrowing costs resulting from the RBA's cash rate hike. This development comes amid a trend of climbing mortgage interest rates over recent weeks, further burdening homeowners with larger repayments. [2]

Conversely, the elevated cash rate may benefit savers. Banks typically respond to RBA rate hikes by increasing yields on savings accounts and term deposits. For account holders with variable-rate savings products, this could translate to improved returns, providing a potential silver lining for consumers looking to grow their savings amidst an inflationary environment. [3]

While the rate hike aims to temper inflation, experts caution about possible broader economic implications, including impacts on employment and growth. The RBA must balance reducing inflation without triggering economic slowdown or job losses, a complex challenge given external pressures such as global energy market fluctuations and Australia's domestic capacity constraints. [1]

Sources

  1. RBA Hikes Key Rate to 15-Year High
  2. Mortgage rates climb for 5th straight week, pushing average rate on a 30-year home loan above 7%
  3. How the Latest Fed Rate Hike Impacts Your Wallet

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