The Reserve Bank of Australia cash rate is at its highest level since 2011. Here is what it means for your monthly mortgage repayments and whether it is time to refinance.
The RBA lifted the cash rate to 4.60% in late 2026, marking its fourth 0.25% rise of the year and the highest benchmark setting since November 2011. Commercial banks have passed the rate rises on to variable home loans. The lowest variable owner-occupier rates currently sit around 5.89% p.a. (for borrowers with ≤80% LVR, principal and interest).
On the average Australian owner-occupier loan of $734,881, each 0.25% rate increase adds approximately $118 to $120 a month in required mortgage payments.
Rates change frequently and this is general educational information. Owly compares home loans across a 40+ lender panel. Call 1300 311 547 or review your borrowing options online.
Where the cash rate stands today
The Reserve Bank of Australia has implemented four consecutive 0.25% cash rate increases in 2026, lifting the policy rate from 3.60% to 4.60%. The decision was driven by persistent core inflation and elevated services sector price pressures.
Major commercial lenders have passed these increases directly onto variable-rate borrowers. Because each lender manages their own cost of capital and net interest margins differently, mortgage pricing now exhibits substantial divergence between the major retail banks and competitive non-bank lenders.
What are current Australian home loan rates?
Published mortgage rates differ considerably depending on loan-to-value ratio (LVR), borrower profile, and whether the property is an owner-occupied residence or an investment asset.
The most competitive variable owner-occupier rates start from 5.89% p.a. (comparison rate ~5.92% p.a.) for borrowers with a 20% deposit or greater. In contrast, standard un-negotiated variable rates at major institutions average between 6.35% and 6.75% p.a. On a $750,000 balance, that 0.60% rate spread equates to more than $4,500 in annual post-tax interest savings.
What each 0.25% rate hike really costs you
This table models the average Australian new owner-occupier loan of $734,881 over a 30-year term. Each 0.25% increase lifts monthly repayments by roughly $120 and adds tens of thousands of dollars to total cumulative interest over the loan lifespan.
| Interest Rate p.a. | Monthly Repayment | Total Cumulative Interest | Total Loan Repaid |
|---|---|---|---|
| 5.89% p.a. (Competitive) | $4,354 / mo | $832,612 | $1,567,493 |
| 6.14% p.a. (+0.25%) | $4,472 / mo | $875,163 | $1,610,044 |
| 6.39% p.a. (+0.50%) | $4,592 / mo | $918,208 | $1,653,089 |
| 6.64% p.a. (+0.75%) | $4,713 / mo | $961,732 | $1,696,613 |
| 6.89% p.a. (+1.00%) | $4,836 / mo | $1,005,739 | $1,740,620 |
Owly Calculation: $734,881 loan over 30 years, monthly principal and interest repayments, no fees. Illustration only, not a credit quote.
Fixed vs variable: which makes sense in 2026?
A variable rate fluctuates in response to RBA rate decisions and funding market movements. It offers maximum flexibility—allowing penalty-free additional repayments, 100% offset account integration, and the freedom to refinance at any time without break costs.
A fixed rate locks your interest rate and monthly repayment for a 1- to 5-year period. While it guarantees cash-flow certainty, it strictly caps additional repayments (usually $10,000/year max) and imposes significant break costs if you refinance or sell the property early.
Many Australian borrowers adopt a split loan structure—for example, fixing 50% of their mortgage to protect against further rate rises while keeping 50% variable linked to an offset account.
Is it time to refinance your mortgage?
Australian owner-occupiers refinanced over $42.9 billion in mortgages this year as households actively combat interest rate creep. Before initiating an external refinance, consider these four vital checks:
- Discharge and settlement fees: Existing lenders typically levy $250 to $400 in statutory discharge and administrative fees.
- New establishment fees: Check whether the incoming lender waives application, valuation, or settlement legal fees.
- The comparison rate: Always compare the all-inclusive comparison rate rather than promotional teaser rates.
- Loan term reset: Ensure refinancing back to a fresh 30-year term does not increase your long-term cumulative interest burden.
How an offset account protects your cash flow
A 100% offset account is an everyday transaction account linked directly to your home loan balance. Every dollar sitting in your offset account reduces the loan balance on which daily interest is calculated.
For example, on a $700,000 mortgage at 6.14% p.a., holding $50,000 of emergency savings in a linked offset account saves you over $3,070 in post-tax interest each year, shortening your loan term by over 2.5 years without locking up your capital.
Home loan frequently asked questions
What is the current RBA cash rate?
The Reserve Bank of Australia cash rate is set at 4.60% following four 0.25% increases through 2026. This is the highest cash rate target recorded since November 2011.
Do banks always pass on RBA rate hikes in full?
While lenders are not legally required to match the RBA, all major commercial banks have historically passed on rate rises to standard variable mortgage products within 10 to 14 days of RBA monetary policy announcements.
How much does each 0.25% rate increase cost on an average home loan?
On an average Australian loan of $734,881 over a 30-year term, each 0.25% increase lifts monthly repayments by approximately $118 to $120. Over 30 years, an extra 0.25% adds more than $42,000 in total interest.
Should I refinance to a lower interest rate today?
If your current variable rate is higher than 6.30% p.a. and you have at least 20% equity in your property, refinancing to a lender offering sub-6.00% rates can save you thousands annually. Speak with an Owly broker to confirm your net savings after discharge costs.
What is an offset account and how does it save money?
An offset account is a transaction account linked to your home loan. Instead of earning taxable interest on savings, your balance directly offsets your loan principal, reducing daily interest charges dollar-for-dollar.
Can first home buyers qualify for stamp duty exemptions?
Yes. In NSW, eligible first home buyers pay $0 stamp duty on homes up to $800,000, with sliding-scale concessions up to $1,000,000. Learn more in our NSW First Home Buyer Guide 2026.
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Refinancing an existing home loan or buying your next property? Talk to Owly about your options. We compare 40+ Australian lenders to ensure you secure the most competitive rate.
Owly (Credit Rep No. 87837) is an authorised credit representative of Finsure Finance & Insurance Pty Ltd, ACL 384704. General information only; it does not consider your personal financial circumstances. Interest rates, fees, and government policies change regularly and do not constitute a credit offer. Lending criteria, terms, and conditions apply.
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