RBA Rate Decision 29 September 2026: Cash Rate Rises to 4.60% — What It Means for Melbourne Borrowers

On Tuesday 29 September 2026, the Reserve Bank of Australia raised the cash rate target by 0.25 percentage points, from 4.35% to 4.60%. The Monetary Policy Board's decision was unanimous. It is the fourth rate rise of 2026 and takes the cash rate to its highest level since 2011. Lenders are expected to adjust variable home loan rates over the next 14 days.

Below, we translate the decision into what it means for Victorian borrowers: Melbourne owner-occupiers, first home buyers, investors and anyone coming off a fixed rate.

What Is the RBA Cash Rate Now?

The RBA cash rate target is now 4.60%, following today's announcement on 29 September 2026. The Board lifted it by 0.25 percentage points because inflation has stayed above the 2–3% target for longer than expected, and it kept the door open to further increases if inflation does not ease.

According to the Monetary Policy Board's statement, the risks to inflation that the RBA had been flagging are now playing out. The Board pointed to three pressures:

• Energy: global energy prices have risen sharply as the conflict in the Middle East has broadened.
• Technology: strong demand linked to artificial intelligence is pushing up prices for technology goods worldwide.
• Domestic capacity: businesses in Australia are still facing capacity pressures.

Domestically, labour market conditions have eased broadly as expected and household spending growth is gradually slowing. The Board also noted that housing prices have fallen in most capital cities and that new housing loans have declined noticeably. On what comes next, the Board said it will do what is necessary to return inflation to target, "including increasing the cash rate target further if needed."

What Governor Michele Bullock said

At her 3:30pm press conference, as reported by ABC News, Governor Bullock said a recession is not the RBA's central case. She noted that unemployment remains low by historical standards, and that underlying inflation has run at around 3.5% for about six months. On the outlook, she said the Board will raise rates again if needed, but if current settings prove restrictive enough to ease inflation pressure, further rises may not be required.

The latest official figures support that picture. The ABS monthly CPI indicator for July 2026 showed headline inflation at 3.5% and trimmed mean inflation at 3.6% over the year. For Melbourne, the ABS put annual inflation at 3.2%.

What Are Economists and Markets Saying?

Economists broadly agree that today's rise was needed. They split on whether another one will follow. In comments reported by the Sydney Morning Herald, AMP chief economist Shane Oliver argued that after more than five years of above-target inflation, the RBA could no longer afford to wait. He does not expect a further hike to be needed in November. KPMG chief economist Brendan Rynne, quoted by AAP, expects another rise in November. HSBC's Paul Bloxham warned that the risk of recession is growing. AAP also reported that financial markets are fully pricing another increase by February 2027.

These are the views of those named and may change as new data arrives. The next major data point is the September-quarter CPI in late October, ahead of the Board's early-November meeting.

How Much Will My Mortgage Repayments Go Up?

If your lender passes on the full 0.25%, repayments on a 30-year $500,000 principal-and-interest loan rise by roughly $81 a month, and on $750,000 by about $123, as the illustrative table shows.

Illustrative only. Based on a 0.25% change being passed on in full, applied to an assumed variable rate of 6.25% p.a. rising to 6.50% p.a., on an owner-occupier principal-and-interest loan with a 30-year term, rounded to the nearest dollar. Fees are excluded. Your rate, loan term, balance and outcome will differ.

Canstar's own analysis uses a 25-year remaining term. It estimates today's rise adds $76 a month on a $500,000 loan, $114 on $750,000 and $152 on $1 million. Across all four 2026 rises, Canstar estimates a borrower who owed $750,000 in February is paying about $454 more a month than at the start of the year (Canstar, 29 September 2026). To model your own loan, try our mortgage repayment calculators.

When Will My Home Loan Rate Change?

Lenders are expected to pass on or adjust their variable rates over the next 14 days. Exact timing varies by lender, and your lender will notify you of any change to your rate and repayments, so check your inbox, app and mail. Fixed rates do not change until your fixed term ends.

If you pay more than the minimum, check that your repayments still cover the new amount.

What Does the Rate Rise Mean for Melbourne Owner-Occupiers?

Melbourne was already softening before today. Cotality's Home Value Index shows Melbourne dwelling values fell 1.1% in August 2026, 3.9% over the quarter and 4.7% over the year, to a median of $786,718. Houses fell faster than units: down 5.7% over the year to a median of $920,432, against a 2.5% fall for units to $629,054.

The auction market reflects the same caution. On AFL Grand Final weekend, the REIV recorded a 77% clearance rate for the week ending 27 September, from a small early sample of 104 reported auctions. The previous week, the REIV recorded 70% across 624 reported auctions. Cotality's preliminary Melbourne clearance rate for Saturday 26 September was 48.8% from 286 auctions. The measures use different methods. We covered the weekend in detail in our Weekend Auction Results for 26–27 September.

Borrowing power is the bigger story for buyers. Lenders assess new loans using your interest rate plus a serviceability buffer. APRA has kept that buffer at 3 percentage points, so every rise in rates reduces what lenders will approve. Before today's decision, Canstar estimated that one 0.25% rise cuts borrowing capacity by about $11,200 for a single borrower on an average wage and $22,400 for a dual-income couple. If you hold a pre-approval, ask your broker whether it has been reassessed at the new rates before you bid. Our borrowing power calculator gives a starting point.

First home buyers in Victoria

For first home buyers, softer prices partly offset higher rates. The federal 5% Deposit Scheme allows eligible buyers to purchase with a 5% deposit and no lenders mortgage insurance, up to a price cap of $950,000 in Melbourne and Victorian regional centres. In Victoria, first home buyers pay no stamp duty on homes up to $600,000 and a concession applies up to $750,000. The $10,000 First Home Owner Grant is limited to new homes valued at $750,000 or less. Eligibility rules apply, so confirm them with the State Revenue Office. Our first home buyer loans page explains how these pieces fit together.

What Does the Rate Rise Mean for Victorian Investors?

Holding costs rise with every rate increase, and Victorian investors also carry the state's land tax settings, including temporary COVID Debt Repayment Plan charges that apply until 2033. How land tax affects you depends on your holdings and structure, so speak with your accountant.

On the income side, conditions are mixed. SQM Research puts Melbourne's rental vacancy rate at 1.8% in August 2026, the second-highest of the capital cities, with combined asking rents of $695.18 a week, up 6.1% on a year earlier. Cotality estimates Melbourne's gross rental yield at 4.0% for dwellings: 3.5% for houses and 5.1% for units.

Because lenders assess existing debts at buffered rates, and APRA's limit on high debt-to-income lending has applied since February 2026, a rate rise can cut an investor's capacity more sharply than an owner-occupier's. ABS lending indicators already showed new investor loan commitments falling 8.6% in the June quarter. If you are planning a next purchase, see our investment loans page.

Should I Fix My Home Loan or Refinance After the Rate Rise?

There is no single right answer. Fixing gives repayment certainty, but fixed rates already price in expected moves, and break costs and reduced flexibility can outweigh the benefit if rates later fall. Some borrowers split their loan between fixed and variable.

If your fixed rate expires in the next six months, start comparing now rather than accepting a revert rate by default. New-customer rates are often sharper than existing-customer rates, so a refinancing review can be worthwhile after a rate rise. Any switch should weigh discharge and application costs, a new valuation, and whether you still pass serviceability at today's higher rates.

What Should I Do Now? A Practical Checklist

• Watch for your lender's notice over the next 14 days. Timing varies by lender.
• Compare your rate with what new customers are offered, and recalculate your budget and offset buffer.
• Note your fixed-rate expiry date and start comparing options three to six months before it ends.
• Revisit any pre-approval before bidding at auction this spring.
• Contact your lender early if repayments will be hard to meet — hardship options exist.
• Speak to a broker about whether your loan structure still suits your goals.

Browse our free finance guides for more, or read our pre-decision RBA September 2026 preview.

IFG's Take

I have worked through several rate cycles since starting in business banking at NAB in 2003, and the pattern is familiar: borrowers who act early have more options than those who wait for their lender's letter.

We don't predict the next move, and I'd be wary of anyone claiming certainty. What we can do is make sure your loan works as hard as possible at today's rates, for clients from Essendon and Moonee Ponds to Coburg North and Keilor East. Sometimes that means a sharper rate or better structure; sometimes it's confirmation you're already well placed.

Frequently Asked Questions: RBA Rate Decision, 29 September 2026

What did the RBA decide on 29 September 2026?

The RBA raised the cash rate target by 0.25 percentage points to 4.60%. The Monetary Policy Board's decision was unanimous. It is the fourth rise of 2026.

When will my home loan rate change?

Lenders are expected to adjust their variable rates over the next 14 days. Exact timing varies by lender, and your lender will notify you of any change to your rate and repayments. Fixed-rate loans are not affected until the fixed term ends.

How much will the September 2026 rate rise add to my repayments?

On an illustrative basis, if the full 0.25% is passed on, a 30-year principal-and-interest loan of $500,000 costs about $81 more a month, $750,000 about $123 more, and $1 million about $164 more.

Will interest rates go up again in 2026?

No one can say for certain. The RBA said it will raise the cash rate further if needed. Some economists expect another rise in November, while others, including AMP's Shane Oliver, do not think one will be needed. The September-quarter CPI in late October will be closely watched.

This article is general information only and does not constitute financial, credit, tax or legal advice. It does not take into account your objectives, financial situation or needs; consider whether it is appropriate for you and seek personalised advice before acting. The RBA decision and statement details are as published by the Reserve Bank of Australia on 29 September 2026. Economist views and market pricing are those of the parties named, as reported on 29 September 2026, and may change at any time; they are not predictions by Integrated Finance Group. Repayment figures are illustrative only and are based on the assumptions stated; they are not offers of credit. Property market data is attributed to its publishers and refers to the periods stated. Integrated Finance Group’s brokers are Credit Representatives of BLSSA Pty Ltd, Australian Credit Licence 391237. All credit applications are subject to lender assessment and approval. Our Credit Guide is available on request. Tax questions should be directed to your accountant.