RBA rate rise: What today’s decision could cost mortgage holders across Australia

Australian mortgage holders are facing another significant hit to household budgets after the Reserve Bank of Australia lifted the cash rate by 0.25 percentage points to 4.60%.

If lenders pass the increase on in full, Compare Club estimates repayments on the average new Australian home loan could rise again by around an extra $119 a month, or a further $1,433 a year.

The impact will be greatest in New South Wales, where the average new loan of $841,692 could cost borrowers an extra $138 a month or $1,651 a year.

Today’s increase is the fourth cash rate rise of 2026, taking the total increase to one percentage point since the beginning of the year.

For somebody with the average Australian new home loan of $730,720, that could mean finding an additional $469 every month, or $5,634 a year, compared with the start of 2026.

Estimated mortgage repayment increases

Compare Club Head of Research Kate Browne said the cumulative impact of repeated rate rises was now impossible for households to ignore.

“Another $119 a month might not sound catastrophic on its own, but this is the fourth increase borrowers have faced this year,” Ms Browne said.

“On the average new mortgage, the combined impact could now be more than $5,600 a year. In New South Wales, it is approaching $6,500.

“For households already juggling higher food, insurance, energy and everyday costs, that is a serious amount of money to find.”

Switching bills could help households fight back

Ms Browne said reviewing other major household bills could help families claw back some of the money being swallowed by higher mortgage repayments.

“Compare Club has calculated that a representative household could potentially save around $4,000 a year by reviewing and switching its home loan, health insurance, life insurance and energy plan,” she said.

“That includes potential annual savings of $1,710 on a home loan, $1,680 on life insurance, $444 on energy and $401 on health insurance.

“Together, that adds up to $4,235 a year, which could offset a significant portion of the additional cost of this year’s rate rises.”

Compare Club research found 67% of Australians only look into alternatives when a renewal notice shows a price increase.

More than half, or 52%, either do nothing or review their bills without switching, with time, tedious processes, complex contracts and a belief that the potential savings are too small among the barriers holding people back.

“Many Australians do not have a spending problem. They have a problem with setting and forgetting their biggest household bills,” Ms Browne said.

“Bills have a way of rolling over year after year, and before you know it, you could be paying significantly more than you need to.

“You do not wait until your car breaks down before booking a service, and household finances should not be any different. A regular review can at least confirm you are still on a competitive deal and, in many cases, put hundreds or thousands of dollars back into your budget.”

Five ways to fight back against higher repayments

• Ask your lender for a better rate: Contact your existing lender and ask whether it can reduce your interest rate. Make it clear that you are considering refinancing.

• Compare your home loan: Do not assume your existing lender will automatically give you its most competitive offer. Compare the interest rate, fees, features and potential refinancing costs.

• Review your other major bills: Savings on energy, health insurance and other household expenses can help absorb some of the increase in mortgage repayments.

• Break the set-and-forget habit: Do not wait until you receive a price increase or renewal notice. Set aside time at least once a year to review your biggest bills.

• Redirect savings to your mortgage: If you save money by switching another bill, consider putting the money into your offset account or making additional repayments, subject to the conditions of your loan.

How much could a household potentially save?

Representative Compare Club customer scenarios found households could potentially save more than $4,200 a year by reviewing four major expenses:

• Home loan: $1,710

• Life insurance: $1,680

• Energy: $444

• Health insurance: $401

• Total potential annual saving: $4,235

Mortgage calculations assume a 30-year principal-and-interest loan, a variable mortgage rate increasing from 6.24% to 6.49%, and lenders passing on the full 0.25 percentage point cash rate increase. Loan sizes are based on ABS Lending Indicators for the June quarter of 2026. Actual repayment changes will depend on the borrower’s balance, remaining loan term, interest rate, loan structure and lender.

Potential switching savings are based on representative Compare Club customer scenarios and previous customer savings data. Actual savings will vary depending on the household, existing products, provider, location, eligibility and available offers.