Interest rates are back in the headlines, with the Reserve Bank due to make its next decision on Tuesday, 3 November. If you have a home loan, a credit card or money in savings, a rate rise changes your money in ways that are worth understanding before the announcement — not after your repayments go up. For the official cash rate setting, see the Reserve Bank’s cash rate target page.
This article is general information only. It is not personal financial advice. For decisions about your own money, talk to a licensed financial adviser.
Where Interest Rates Stand Right Now
The Reserve Bank’s cash rate target is 4.60%, effective from 30 September 2026. That followed four rises during 2026 — in February, March, May and September — which lifted the target a full percentage point from 3.60% at the start of the year. The next decision is due at 2.30pm on 3 November 2026.
The reason rates have been rising is inflation. Annual consumer price inflation reached 4.3% in the year to September 2026, up from 4.0% in August, while the Bank’s preferred underlying measure, the trimmed mean, sits around 3.6% to 3.7% for the year — well above the Bank’s 2% to 3% target range. The major banks are now tipping another quarter-point rise in November, which would take the cash rate to 4.85%, though no decision has been made yet.
What Happens to Your Home Loan
For most borrowers, this is where a rate rise bites first. If you have a variable-rate home loan, your lender will usually pass on some or all of a cash rate rise within a few weeks, and your minimum monthly repayment goes up. After the September rise, the major banks passed it on in full from 9 October.
How much extra depends on your loan size. Canstar estimates that a 0.25% rise adds about $92 a month to repayments on a $600,000 loan. On a larger loan the increase is bigger, and four rises in one year add up — the same estimate puts the total extra since the start of 2026 at around $456 a month on a $600,000 loan.
If your loan is fixed, nothing changes until the fixed term ends. Your rate and repayments stay the same no matter what the Reserve Bank does. The risk comes at the end of the term: if rates are higher then, the new rate you roll onto will be higher too. If you are buying your first home or thinking about borrowing, a higher rate also shrinks what you can borrow, since lenders test whether you could still afford repayments at a higher rate. Our guide on getting a home loan while on probation explains how lenders assess trickier applications.
What Happens to Your Savings
Here the news is better, but not as good as it sounds. When the cash rate rises, banks often lift the interest they pay on savings accounts and term deposits — but they do not have to pass on the full rise, and they do not all move at the same speed. Online banks and smaller lenders tend to move faster than the big banks.
It is also worth checking whether your savings rate is actually keeping up with inflation. If prices are rising 4.3% a year and your savings account pays less than that, your money is still losing buying power even though the balance is growing. That is why a rate rise is a good moment to compare savings accounts rather than assuming your current one has kept up.
What Happens to Credit Cards and Personal Loans
Most credit cards carry variable interest rates, so a cash rate rise usually flows through to the interest charged on any balance you carry. The same applies to variable personal loans and car loans. Fixed personal loans are unaffected until they end, just like fixed home loans.
The practical step is simple but important: a balance that was manageable at a lower rate can become expensive quickly after several rises. Paying down high-interest debt before another rise is one of the most effective moves available, because credit card rates are far higher than home loan or savings rates to begin with.
What Happens to Shares and Property
Higher rates tend to weigh on asset prices. Borrowing costs more, so buyers can afford less, which cools demand for houses. For shares, higher rates make safer investments like term deposits relatively more attractive, and they raise borrowing costs for companies, which can squeeze profits. None of this happens overnight or evenly — markets react to what they expect the Reserve Bank to do next, not just to each decision itself.
What to Do Before the Next Decision
1. Work out your new repayment
Ask your lender or use a repayment calculator to see what a 0.25% rise would add to your monthly payment. Knowing the number removes the surprise.
2. Check your offset and redraw
Money sitting in an offset account reduces the interest charged on your home loan, so it works harder when rates are higher. If you have spare cash, offsetting beats a standard savings account for most variable-rate borrowers.
3. Review your savings rate
Compare your savings account against what other banks are offering. If yours has barely moved while the cash rate rose a full point this year, switching could be worth more than it first looks.
4. Tackle high-interest debt first
Credit card balances should come before extra mortgage payments or investing, because their interest rates are the highest and they rise with the cash rate.
5. Don’t panic about fixed versus variable
Fixing your loan locks in certainty but can cost you if rates fall later, and breaking a fixed loan early can attract hefty fees. It is a decision to weigh carefully, not one to rush the week before a Reserve Bank meeting.
The Bottom Line
When interest rates rise, borrowing gets more expensive and saving gets slightly more rewarding — but the two sides do not move in lockstep. Variable-rate borrowers feel it within weeks, fixed-rate borrowers feel it later, savers benefit only if their bank passes the rise on, and credit card holders feel it fastest of all. With the cash rate at 4.60% and another decision due on 3 November, the smart move is to check your own numbers now: your repayment, your savings rate and your highest-interest debt. A rate rise is not something that happens to the economy in general. It happens to your budget, in dollars, and a few checks today can soften the landing.
