Last reviewed September 2026 by Megan Birot, Content Editor, OurTop10. Figures checked against the sources named in the article.The Reserve Bank has held the cash rate at 4.35% since May 2026, and the next decision is due on 29 September. Every move it makes, up or down, lands on your repayment within a few weeks. This guide shows what a rate change actually does to a home loan in dollars, why lenders had already tested you for it before you borrowed, and what to do when your repayment moves.
If you want to know which way the next decision is likely to go, our OurTop10 Rate Prediction Index tracks what the market and a panel of economists expect ahead of each meeting.
What a 0.25% move does to your repayment
A standard cash rate change is 0.25 percentage points. If your lender passes it on in full, here is the monthly difference on a 30-year principal and interest loan going from 6.00% to 6.25%:
- $500,000 loan: about $81 a month more
- $600,000 loan: about $97 a month more
- $750,000 loan: about $121 a month more
- $900,000 loan: about $146 a month more
A cut works the same way in reverse, if the lender passes it on. A full percentage point, four standard moves, is roughly four times those figures: close to $400 a month on $600,000 and almost $500 on $750,000. Our repayment calculators will run your own balance.
Lenders do not have to pass on a change, and they do not have to pass it on in full or on the same day. After a cut, the gap between what your lender did and what its competitors did is worth checking, because that gap is where refinancing pays.
Why you were already tested for it
Every home loan written in Australia is assessed at 3 percentage points above the rate you actually pay. APRA set that buffer and confirmed in May 2026 that it stays. So a borrower approved at 6% has already been tested at 9%, which on a $600,000 loan is a repayment of about $4,830 a month against the $3,600 they signed up for.
That does not make a rate rise painless. It means the lender believed you could absorb one when it approved the loan, and it is the reason borrowing power feels lower than the advertised rate suggests. Our guide to borrowing capacity goes through how the test works.
What the last cycle taught
Between May 2022 and November 2023 the cash rate rose 13 times, from 0.10% to 4.35%. A $600,000 variable loan went from around $2,500 a month to about $4,000. Borrowers who had fixed at under 2% in 2021 felt none of it until their terms ended, then all of it at once, which is what the “mortgage cliff” of 2023 and 2024 referred to.
The lesson was not that fixing is right or wrong. It was that the households who came through it were the ones with a buffer, either in an offset account or in redraw, and the ones who refinanced when their lender stopped competing. Our quarterly Mortgage Stress Report, built on Digital Finance Analytics household data, tracks how many households are still under pressure and where.
What to do when your rate goes up
Check the rate you are on against the lender’s new-customer rate. Do this before anything else. Lenders advertise sharp rates to win new borrowers and let existing ones drift. If the gap is more than about 0.3 percentage points, ring the retention team and ask them to match it. They usually will, because it is cheaper than losing you.
Refinance if they will not. A broker can move you across a panel of lenders and the new lender often pays a cashback or waives fees. Our guide to why people use a broker covers how that works and what it costs, which is usually nothing.
Keep the repayment where it was, if you can. If rates fall and your minimum repayment drops, leave the repayment at the old figure. The difference goes straight to principal and builds a buffer in redraw for the next rise.
Split if the exposure is too much. A split loan fixes the part of the repayment you could not absorb if rates rose again, and leaves the rest variable. Our guide to fixed vs variable goes through how to work out the proportion.
Talk to the lender early if it is not working. Every lender has a hardship team, and they are far more useful before a repayment is missed than after. A missed repayment goes on your credit file; a hardship arrangement made in advance generally does not.
What to do when your rate goes down
Three things. Check that your lender actually passed the cut on, and in full. Keep paying the old amount. And if the lender passed on less than its competitors, that is the moment to refinance, because the market has just told you what your loan should cost.
Rate change impact calculator
See what the next Reserve Bank move does to your repayment, and what a full percentage point either way would look like.
Built by OurTop10. Results are estimates for comparison only and are not credit advice. Figures stay in your browser and are not sent anywhere.
What to do next
Look at the Rate Prediction Index for what the next meeting is expected to bring, run your balance through the calculators at the current rate and at 1 percentage point higher, and if the rate you are paying is above what your lender offers new customers, have a broker price a move. Our ranked lists for Sydney and Melbourne are reviewed regularly. First home buyers still choosing a loan should start with the best home loans for first home buyers guide.
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FAQs
How much does a 0.25% rate rise add to my mortgage?
On a 30-year loan going from 6.00% to 6.25%, about $81 a month on $500,000, $97 on $600,000, $121 on $750,000 and $146 on $900,000, if the lender passes the rise on in full.
Do banks have to pass on RBA rate changes?
No. Lenders set their own rates. Most pass on rises quickly and in full; cuts are sometimes passed on late or in part. Compare what your lender did with what its competitors did after each decision.
When does a rate change hit my repayment?
Usually two to four weeks after the lender announces its change. The lender must give you notice of a repayment increase, and the new amount applies from the date in that notice.
Will my fixed rate change when the RBA moves?
Not during the fixed term. It changes when the term ends and the loan rolls onto the lender’s variable rate, which is why the end date matters more than the announcement.
What is the RBA cash rate now?
4.35%, unchanged since 5 May 2026. The next decision is due on 29 September 2026. Our Rate Prediction Index tracks what the market expects.
What should I do if I cannot afford the new repayment?
Contact your lender’s hardship team before you miss a payment. Options include a temporary reduction, a switch to interest-only, or an extended term. A missed repayment goes on your credit file; a hardship arrangement made in advance generally does not.
Megan Birot
Content Editor, OurTop10
Megan Birot is OurTop10’s Content Editor. She holds a Certificate IV in Finance and Mortgage Broking (FNS40821) and checks every guide on the site against current lender policy, government scheme rules and state revenue office thresholds before it goes live.
She also runs the editorial reviews on OurTop10’s broker, accountant, conveyancer and buyer’s agent shortlists, and writes the media releases for its quarterly mortgage stress research.