Persistent inflationary pressures have prompted the Reserve Bank of Australia (RBA) to increase the cash rate by another 0.25 percentage points to 4.85%.

The decision marks the fifth increase for 2026 and takes the cash rate to its highest level since 2008.

Read today’s official statement on the RBA’s website.

Inflation has picked up again, with Australia’s annual headline rate rising to 4.3% in September from 4.0% in August. Underlying inflation was 3.6%. Both measures remained above the RBA’s 2-3% inflation target range.

Fuel prices were part of that rise, jumping 9.4% in September, although they were excluded from that month’s trimmed mean measure of underlying inflation. Housing remained the largest contributor to annual inflation.

“Annual inflation of 5.2% for housing reflected rising costs for both new dwellings and electricity,” said Rachael McCririck, ABS head of price statistics.

For homeowners, attention now turns to how lenders respond and what that means for variable-rate repayments. While the impact will depend on each lender’s decision, recent research shows some borrowers are already finding it harder to keep up.

Analysis by Experian found that the number of Australian home loans showing signs of repayment strain grew 7.3% in the first half of 2026, more than three times the 2.3% increase recorded during the same period last year.

If you’re finding repayments difficult to manage, you don’t need to wait until you’ve fallen behind to ask for support. Contact your lender’s hardship team early. We can help you prepare for that conversation and understand the options available.

Higher borrowing costs are also changing the picture for buyers and sellers. Domain’s September quarter report showed combined capital-city house prices fell 4.7%, the steepest quarterly drop in its records, with every capital recording a decline for the first time in 15 years.

“Homes are taking longer to sell, there is greater scope to negotiate, and sellers are having to be more realistic about price expectations,” said Domain’s chief residential economist Dr Nicola Powell.

For those planning to buy, a lower purchase price is only part of the equation. Before making an offer, it’s worth taking a fresh look at your budget to make sure repayments leave room for everyday expenses and possible future rate changes.

The next cash rate decision will be announced on 8 December.