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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →The Reserve Bank raised the cash rate target by 0.25 percentage points to 4.60 per cent on 29 September 2026. The Monetary Policy Board's decision was unanimous, with all nine members in favour. It is the fourth increase of the year and takes the cash rate to its highest level since October 2011, when it stood at 4.75 per cent, Savings.com.au and Money magazine reported on the day.
The Board's statement names housing among the parts of the economy that are already slowing. According to the Commonwealth Bank's summary of the decision, published on 30 September, the Board noted that housing prices had fallen in most capital cities and that new housing loans had declined noticeably. It raised the rate anyway, because inflation has come in higher than it expected.
The year so far
- FebruaryFirst rise of the year, of 0.25 points, to 3.85 per cent.
- MarchSecond rise, to 4.10 per cent.
- MayThird rise, to 4.35 per cent.
- 11 AugustThe Board holds, and says it will act if inflation risks materialise.
- 29 SeptemberFourth rise, to 4.60 per cent, by unanimous decision.
The four increases add up to one full percentage point since January. The Commonwealth Bank's summary confirms the total, and the months of the earlier rises are as reported by Savings.com.au. The Board meets eight times a year under the calendar the Reserve Bank publishes, and September's was the sixth meeting of 2026.
August's pause, the second in a row after the June meeting also left the rate unchanged, had looked like a possible end to the sequence. The Board held the rate at 4.35 per cent on 11 August, also unanimously, after inflation figures for the June quarter came in weaker than expected, Savings.com.au reported at the time. Westpac's economists noted that day that the Board had narrowed its wording: it was prepared to raise rates if upside risks to inflation materialised. The forecasts published with that decision had underlying inflation, measured by the trimmed mean, at 3.3 per cent by the end of 2026 and unemployment at 4.5 per cent.
Related readQueensland's mean dwelling price is now second only to NSW, ABS saysSeven weeks later the Board said some of those risks were materialising. Savings.com.au reports headline inflation of 3.5 per cent for July, with the trimmed mean at 3.6 per cent, and Money magazine puts the latest annual rise in the consumer price index at 4.0 per cent, against a target band of 2 to 3 per cent. The statement cited higher global energy prices linked to the conflict in the Middle East, which had risen well beyond what the Board assumed in August, strong demand for technology goods associated with artificial intelligence, and businesses passing on higher costs.
The Board also acknowledged what its earlier decisions had done. The three increases since the start of the year had tightened financial conditions and the economy was slowing, the statement said, according to Savings.com.au's account, while the labour market had eased broadly as expected. Unemployment was 4.6 per cent in August. Money magazine's comparison with the last time the cash rate was this high is instructive: in September 2011 inflation was 3.5 per cent and unemployment 5.2 per cent. The Board added that it would do what it considers necessary to return inflation to target, including raising the cash rate further if needed.
From the cash rate to a buyer's limit
A rate rise reaches home prices mainly through what buyers can borrow. Lenders assess a new loan at an interest rate 3 percentage points above the rate actually charged, under a buffer set by the Australian Prudential Regulation Authority. When lenders pass on a cash rate rise, the assessment rate rises with it and the largest loan a given income can support shrinks.
Related readQueensland's median house price posts its first quarterly fall since 2022Two firms published estimates of that effect around the decision. They use different households and different assumptions, so the dollar figures differ, but the proportions are close.
| Household | Source | Reduction | Share |
|---|---|---|---|
| Single, average wage of $108,650 | Canstar | $47,400 | 9% |
| Couple, two average wages | Canstar | $94,700 | 9% |
| Couple earning $200,000 combined | Aussie | $97,929 | 9% |
Canstar analysis published 28 September 2026; Aussie modelling reported by The Adviser, 29 September 2026. Both were prepared before the decision and assume a fourth rise of 0.25 points. Illustrative households, not market data.
Aussie's example gives the path as well as the total. For its first home buyer couple, borrowing capacity was $1,089,000 before this year's increases and $1,013,038 after the first three, a reduction of $75,962. The fourth takes the limit to $991,071. On that modelling, each quarter-point rise has removed roughly $22,000 to $25,000 of buying power from such a couple. Canstar's estimate for the fourth rise alone is $11,200 for a single borrower on the average wage and $22,400 for a couple.
Those are firms' estimates for particular examples, and individual lenders and households differ. The direction is not in doubt, and neither is the scale: close to a tenth of borrowing capacity in nine months.
The limit has fallen further than Brisbane prices have
Cotality's index shows Brisbane dwelling values down 2.7% over the three months to August. The modelled examples put the fall in borrowing capacity at about 9% over the year. Aussie's own conclusion, as reported by The Adviser, is that higher rates have erased the affordability gained from lower prices.
What borrowers will pay
For existing borrowers the effect is on the monthly budget. Money magazine calculates that the rise adds $113 a month to repayments on an average new mortgage of $731,000 if it is passed on in full, based on an average variable rate of 6.21 per cent. The four increases of 2026 together add about $427 a month to that loan, on the magazine's figures.
It will be passed on. All four major banks announced within a day that they would lift variable home loan rates by 0.25 percentage points for owner-occupiers and investors, each with effect from 9 October, Savings.com.au reported on 30 September. Westpac's own example is an extra $79 or so a month on a principal and interest loan of $500,000.
Related readReading a suburb median price in Queensland: what it shows and hidesSavers are on the other side of the same decision, and some banks raised deposit rates on the day, Savings.com.au reported. That matters to the housing market at the margin: a first home buyer's deposit earns more while they wait, and the return an investor can get from cash moves closer to the gross rental yield on a home.
Queensland this spring
For the property market the effect is on the next sale. Queensland went into this decision with prices already easing. Brisbane values fell 0.6 per cent in July and 1.0 per cent in August on Cotality's index, and SQM Research counted 26.5 per cent more homes for sale in Brisbane in August than a year earlier.
The Board's remark about housing loans has a Queensland counterpart. The Real Estate Institute of Queensland reported on 31 August that new housing loan commitments in the state fell 5.9 per cent in the June quarter, to 29,543, with investor commitments down 10.1 per cent and first home buyer commitments down 1.2 per cent. Those figures predate both the August pause and this increase.
A higher cash rate adds to that pressure without changing its nature. Buyers who were approved for finance before the rise may find a renewed approval comes back lower. Vendors launching spring campaigns are pricing for a pool of buyers with slightly less to spend than a month ago.
Forecasters had Brisbane holding up better than the southern capitals even with this rise assumed. Westpac's projections, as set out by Canstar on 28 September, have Brisbane values finishing 2026 about 2 per cent higher than they started, against falls of 10 per cent in Sydney and 8 per cent in Melbourne. Brisbane was 2.8 per cent ahead for the year at the end of August, so that forecast already allows for further falls before December. It is one bank's projection, not a measurement.
What is scheduled next
The Board's next meeting is on 2 and 3 November, with the decision announced on the second day, and a quarterly Statement on Monetary Policy with new forecasts is due with it. The final meeting of the year is on 7 and 8 December.
The outlook for rates is not settled. Money magazine reports that two banks, ANZ and HSBC, expect another increase in November, while the Commonwealth Bank, NAB and Westpac have not pencilled one in and have not ruled one out. NAB's economists think the Board has finished tightening for now, according to Savings.com.au. The Commonwealth Bank's economists describe November as a live meeting and see rate cuts as possible in August and November 2027 if the economy slows enough. A Finder survey cited by Money found 48 per cent of economists expecting at least one more rise before the end of the year.
Those are forecasts by the institutions named, and they disagree with each other. The Board itself has promised nothing beyond watching inflation, and the first housing figures to reflect its decision will be those for October.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
