RBA raises the cash rate to 4.60%, a 15-year high: what it costs landlords

The Reserve Bank raised the cash rate target by 0.25 percentage points to 4.60% on 29 September 2026, the highest level since late 2011. It is the Board's fourth rise this year and takes effect from 30 September. For landlords on variable investment loans, lenders are likely to pass the move on in full within days.

4.60%

What the Board decided and why

In its 29 September statement, the Monetary Policy Board said inflation remains elevated and that some of the upside risks flagged in August are materialising. It pointed to higher global energy prices after the Middle East conflict broadened, rapid growth in technology-related goods prices, and ongoing pressure on domestic capacity. Firms, it said, are facing cost pressures and either raising prices or looking to do so.

The Board also noted that growth has slowed, housing prices have fallen in most capital cities and new housing loans have declined noticeably. Labour market conditions have eased broadly as expected. Even so, it judged that a further tightening was warranted to support a return of inflation to the 2 to 3% target in a reasonable period.

The decision was unanimous. The Board said it will continue to do what it considers necessary, "including increasing the cash rate target further if needed."

What the rise costs on an investment mortgage

Lenders passed on this year's earlier rises in full. The RBA's F6 lending rates table shows the average variable rate on outstanding investor loans at 6.5% in July 2026, up from 5.8% in January. If today's move is passed on in full, that average would sit around 6.75%.

Interest-only figures are 0.25% of the loan, divided by 12. Principal and interest figures are Canstar estimates for a typical variable loan, also reported by the ABC. Your own letter from the bank will depend on your rate, remaining term and whether you are interest-only or principal and interest.

Put that against rent. On a $750,000 property yielding 3.79% gross (Cotality's national figure in August), you collect about $2,369 a month before expenses. At 6.75% interest-only on a $600,000 loan, interest alone is $3,375 a month. That is a shortfall of more than $1,000 a month before rates, insurance, strata, maintenance and land tax. We walked through that cash-flow gap in more detail in our September rental market briefing.

Fixed-rate loans are unchanged until the fixed term ends. When they roll off, the full cycle of rises applies at once.

Rent will not automatically cover the gap

Some landlords will look straight at a rent increase. That is understandable, but the local market sets the ceiling. The RBA's own chief economist has said rents move with supply and demand, not with an individual landlord's interest bill. In cities where vacancies have already risen, such as Sydney and Canberra, asking rents have stalled or fallen in places. Pushing a renewal above the market can cost you a reliable tenant and several weeks of vacancy that wipe out the gain.

Check the rules with your state regulator before you increase rent. Notice periods and frequency limits differ, and most jurisdictions cap how often you can raise rent on the same tenancy. Price to the suburb you are in, not to the national cash rate.

What to do this week

1. Work the new repayment into your cash flow now. Assume your lender passes on the full 0.25 points. On interest-only terms, that is $125 a month per $600,000 of debt. If that figure breaks your buffer, call your lender or broker before the rate-change letter arrives.
2. Stress-test one more rise. The Board has not closed the door on November. On the same $600,000 interest-only loan, another 0.25 points would take the extra from today's rise and a possible fifth rise to $250 a month above the pre-September rate.
3. Keep cash in the offset if you can. Drawing on a redraw or offset is usually cheaper than selling into a soft market or refinancing under a tighter serviceability test.
4. Do not fix only because rates rose today. Fixed rates moved up in the week before the decision as lenders priced this hike in. Compare any fixed offer with where the major banks expect variable rates to sit over the same term.
5. Review each property's tax position. Higher interest is generally deductible on a rental loan, but the negative gearing changes mean the value of that deduction depends on when you bought. Keep clean records of every interest statement.

The next Monetary Policy Board meeting is scheduled for 2 to 3 November 2026. Until then, treat 4.60% as the new base case for your holding costs, not a temporary spike.