How does the RBA cash rate affect my mortgage?

Variable rate mortgages typically move within days of an RBA decision. A 0.25% hike on a $500K loan adds roughly $70-80/month. Fixed rates are set at origination and do not change until the fixed period ends.

What was the RBA rate in February 2026?

The RBA raised the cash rate from 3.60% to 3.85% on February 4, 2026. This was the first increase since November 2023, following rate cuts in 2025.

Should I fix my mortgage rate?

Fixed rates lock in repayments but limit flexibility. If you expect further hikes, fixing can provide certainty. Compare break costs and variable vs fixed offers before deciding.

How much does a 0.25% rate hike cost?

On a $500,000 loan over 25 years, a 0.25% increase adds approximately $70-80 per month, or $21,000-$24,000 over the loan term.

When does the RBA meet to set interest rates?

The RBA Board meets 11 times per year, typically on the first Tuesday of each month (except January). Decisions are announced at 2:30pm AEST.

Can I refinance to avoid a rate hike?

Yes. Refinancing to a lower-rate lender can offset the impact. Compare offers, factor in break costs and application fees, and ensure the savings justify the switch.

4 more

HOTABC Australia, The Guardian, ReutersFebruary 3, 2026🇦🇺 AUSTRALIAFinance

🇦🇺

Australia RBA Raises Rates 0.25% - First Hike Since Nov 2023

The Reserve Bank of Australia raised the cash rate by 0.25% to 4.60% in February 2026 — the first rate increase since November 2023. With 6.5 million Australian mortgages, even a small rate change affects monthly repayments by hundreds of dollars. This calculator shows exactly how the hike impacts your home loan.

Concept Fundamentals

4.60%

New Cash Rate

+0.25% hike

6.5M

Mortgages Affected

Australian home loans

+$78/mo

Avg Impact

On $600K loan

Nov 2023

Last Hike

27 months ago

Ready to run the numbers?

Why: Australia's housing market is one of the most leveraged in the world, with average household debt-to-income ratios exceeding 200%. The RBA's rate hike to 4.60% directly increases variable mortgage rates, adding hundreds of dollars to monthly repayments for the average borrower. With the median Australian home price at $920,000 and average loan size of $620,000, understanding the dollar impact of rate changes is critical for household budgets.

How: The calculator takes your current loan balance, remaining term, and existing interest rate, then applies the 0.25% RBA increase to show your new monthly repayment, the increase in dollars, and the total additional interest over the life of the loan. It also models further potential rate changes to help you stress-test your budget.

Your new monthly mortgage repayment after the rate hikeDollar increase per month and per year from the 0.25% rise

Methodology

📊RBA Official Rate

Reserve Bank of Australia cash rate target as announced February 2026

🏠ABS Housing Data

Australian Bureau of Statistics housing finance and loan data

🛡️APRA Lending Standards

Prudential lending buffers and serviceability requirements

Sources:Reserve Bank of AustraliaABS Housing Finance

Run the calculator when you are ready.

Calculate Your Mortgage ImpactSee how the RBA rate hike affects your home loan repayments

📅 Rate History Timeline — Recent RBA Decisions

Feb 4, 2026

+0.25% → 3.85% (first hike since Nov 2023)

Dec 2025

Hold → 3.60%

Nov 2025

-0.25% → 3.60% (cut)

Sep 2025

-0.25% → 3.85% (cut)

Nov 2023

Last hike before 2026

🇦🇺 Australian Property Scenarios

Click any example to auto-fill the calculator:

🏠 Sydney Median Home ($1.2M)

Typical Sydney property with 80% LVR mortgage

🏢 Melbourne Apartment ($650K)

Melbourne apartment purchase with moderate deposit

🏡 Brisbane Family Home ($800K)

Queensland family home - impacted by electricity price surge

📈 Perth Investment Property ($550K)

WA investment property with interest-only period

🔑 First Home Buyer ($600K)

First home buyer with smaller deposit

Loan Details

Loan Amount ($AUD)

Current Rate (%)

New Rate After RBA Hike (%)

Remaining Loan Term (Years)

Property Value ($AUD)

Annual Household Income ($AUD)

State/Territory

RBA Rate Impact Analysis

$67.94

Monthly Payment Increase

Annual Impact

$815.23

Total Additional Interest

$20,380.67

ANALYSIS RESULTS

RBA rate impact calculation summary

CALCULATED

MONTHLY INCREASE

A$68

per month extra

ANNUAL IMPACT

A$815

extra per year

TOTAL ADDITIONAL INTEREST

A$20,381

over remaining term

🔥 Rate Stress Test

What if the RBA raises rates further?

⚠️

Breakeven Rate (30% of Income)

Your repayments exceed 30% of income (mortgage stress threshold) at a rate of 5.35%

📊 Payment Comparison

Metric	Before Hike (3.60%)	After Hike (3.85%)	Difference
Monthly Payment	$2,530.01	$2,597.95	+$67.94
Annual Payments	$30,360.16	$31,175.39	+$815.23

📈 Monthly Payment Comparison

⚠️ Risk Analysis

LVR

66.67%

Affordability Ratio

25.98%

Stress Test Rate

6.85%

Stress Test Payment

$3,486.20

📚 Understanding RBA Rate Changes

February 3, 2026 RBA Decision: The Reserve Bank of Australia raised the cash rate by 0.25% to 3.85% - the first increase since November 2023. This follows inflation concerns after rate cuts in 2025 brought the rate down from 4.35% to 3.60%.

Why Did RBA Raise Rates?

Inflation jumped to 3.8% (above the 2-3% target) due to electricity prices rising 21.5% as government subsidies ended. The RBA described this as an "insurance" tightening rather than the start of a rate-hiking cycle.

What's Next?

Most economists expect this to be a "one and done" rate hike. Westpac suggests the RBA will take a "wait-and-see" approach. If inflation stabilizes, rates could hold or potentially decrease later in 2026.

📋 Key Takeaways

• RBA cash rate 4.35% — The Reserve Bank of Australia holds rates steady, affecting variable mortgage rates
• Variable mortgage rates 6.5%+ — Most lenders charge 2-2.5% above the cash rate for standard variable loans
• Fixed vs variable choice — Fixed rates offer certainty but limit flexibility; variable rates allow offset accounts
• Offset accounts — Can save $100K+ over loan life by reducing interest on principal balance
• Mortgage stress indicators — Watch for affordability ratio above 30%, LVR above 80%, and payment-to-income strain

💡 Did You Know?

🇦🇺RBA cash rate is 4.35% as of February 2026 — the highest since December 2011, following 13 rate hikes from 2022-2023Source: RBA

📊Average variable mortgage rate in Australia is 6.5%+, with discounted rates around 6.0-6.3% for new borrowersSource: APRA

📈RBA raised rates 13 times from May 2022 to November 2023, taking cash rate from 0.10% to 4.35% peakSource: RBA History

🏠1.5 million Australian households are in mortgage stress, spending more than 30% of income on repaymentsSource: Roy Morgan Research

💰Offset accounts can save $100K+ over a 30-year loan by reducing interest on principal — equivalent to earning 6.5% tax-freeSource: Financial Advisors

🏘️Australia's average home price exceeds $900K, making mortgage affordability a critical concern for first-time buyersSource: CoreLogic

🎯 Expert Tips

💳Use offset accounts to reduce interest — every dollar in offset saves interest at your loan rate (typically 6.5%+), effectively earning tax-free returns

🔍Compare lenders annually — loyalty doesn't pay; new customer rates are often 0.5-1% lower than existing customer rates

🔒Consider fixed-rate period — If you expect rates to rise further, locking in 1-3 years provides payment certainty, but watch for break costs

🛡️Maintain emergency buffer — Keep 3-6 months of expenses in offset or savings to handle rate rises and unexpected costs

📊 Comparison Table

Calculator	Cash Rate	Variable Rate	Features
RBA Calculator	4.35%	6.5%+	Official rate tracking
CommBank	-	6.49%	Bank-specific rates
This Calculator	4.35%	6.5%+	Impact analysis, offset accounts, stress testing

📈 Infographic Stats

4.35%

RBA Cash Rate

6.5%

Avg Variable Rate

1.5M

Households in Stress

$900K+

Avg Home Price

Quick Answer

The RBA raised the cash rate from 3.60% to 3.85% on February 4, 2026. On a $500K loan, that adds roughly $70-80/month. Variable mortgages follow RBA moves; fixed rates do not. Refinancing or an offset account can soften the impact.

📚 How Do RBA Rate Decisions Affect Your Mortgage?

📋 How to Use This Calculator

Enter Your Loan Amount

Input your current mortgage balance in Australian dollars

Set Interest Rates

Enter your current rate and the new rate after RBA change

Add Property Details

Include property value and income for full analysis

Calculate & Review

Click Calculate to see your monthly and total impact

📐 Formulas Used

Monthly Payment (PMT)

PMT = P × [r(1+r)^n] / [(1+r)^n - 1]

P = Principal, r = Monthly rate, n = Total payments

Loan-to-Value Ratio (LVR)

LVR = (Loan Amount / Property Value) × 100

Below 80% LVR avoids LMI requirement

Affordability Ratio

Ratio = (Annual Payments / Annual Income) × 100

Should be below 30% for comfortable repayments

Total Interest

Total Interest = (PMT × n) - Principal

Total amount paid in interest over loan term

February 3, 2026: Surprise Rate Hike

The RBA raised the cash rate from 3.60% to 3.85% - the first increase since November 2023. This follows three rate cuts in 2025 (Feb, May, Aug) that brought rates down from 4.35%.

3.85%

New Cash Rate

+0.25%

Increase

3.8%

CPI Inflation

21.5%

Electricity Increase

Why Did the RBA Raise Rates?

Electricity Price Shock

Government electricity subsidies ended in Queensland and WA, causing a 21.5% price jump. This pushed CPI inflation to 3.8%, above the RBA's 2-3% target.

Stubborn Services Inflation

Underlying inflation (trimmed mean) remains sticky at 3.2%. Rents, insurance, and healthcare costs continue to rise faster than the target.

Strong Labor Market

Unemployment at 4.0% and wage growth at 3.5% indicate continued demand pressure in the economy.

"Insurance" Move

RBA described this as an insurance tightening to prevent inflation expectations becoming unanchored, not the start of a hiking cycle.

RBA Cash Rate History

Date	Cash Rate	Change	Context
Feb 2026	3.85%	+0.25%	First hike since Nov 2023
Aug 2025	3.60%	-0.25%	Third 2025 cut
May 2025	3.85%	-0.25%	Second 2025 cut
Feb 2025	4.10%	-0.25%	First 2025 cut
Nov 2023	4.35%	+0.25%	Peak rate
May 2022	0.35%	+0.25%	First post-COVID hike
Nov 2020	0.10%	-0.15%	COVID emergency low

Big Four Bank Mortgage Rate Response

Banks typically pass on full RBA rate changes. Expect these approximate standard variable rates:

CBA

~8.85%

Standard Variable

Westpac

~8.79%

Standard Variable

NAB

~8.74%

Standard Variable

ANZ

~8.69%

Standard Variable

Note: Rates are indicative. Discounted rates available for new borrowers.

How This Rate Rise Affects Monthly Payments

Typical monthly increase for various loan sizes (0.25% rate rise, 25-year term):

Loan Amount	Before	After	Monthly Increase	Annual Increase
$400,000	$2,610	$2,675	+$65	+$780
$600,000	$3,915	$4,013	+$98	+$1,176
$800,000	$5,220	$5,350	+$130	+$1,560
$1,000,000	$6,525	$6,688	+$163	+$1,956

Cumulative Rate Rise Impact (Since May 2022)

Total mortgage payment increase since rates rose from 0.10% to 3.85%:

$500K Loan

+$1,650/mo

+$19,800/year

$750K Loan

+$2,475/mo

+$29,700/year

$1M Loan

+$3,300/mo

+$39,600/year

Net Change

+3.75%

Since May 2022

What Can You Do?

Negotiate Your Rate

Call your lender and ask for a better rate. Loyalty doesn't pay - new customer rates are often 0.5-1% lower than what existing customers pay.

Compare & Refinance

Check comparison rates at other lenders. Even with switching costs, a 0.5% rate drop on $600K saves ~$200/month.

Switch to Fixed?

Fixed rates around 5.89-6.49% offer protection if you think rates will rise further. But most economists expect this to be a "one and done" hike.

Review Your Budget

Look for expenses to cut. Consider meal planning, reviewing subscriptions, and shopping around for utilities and insurance.

❓ Frequently Asked Questions

When will rates come down?

Most economists expect rates to remain elevated through 2026. Westpac forecasts a potential cut in late 2026 if inflation returns to target. Don't count on significant cuts this year.

Will there be more rate rises?

The RBA described this as an "insurance" tightening. Unless inflation surprises significantly to the upside, this is likely a one-time adjustment. Markets are pricing in a 30% chance of one more hike in 2026.

Should I fix my mortgage?

Fixed rates (5.89-6.49%) are lower than variable (~6.50-6.80% discounted). If you want certainty, fixing makes sense. But if rates don't rise further, variable may work out cheaper. Consider splitting your loan.

What is the 3% buffer test?

APRA requires banks to test whether borrowers can afford repayments at 3% above the loan rate. With rates at 6.5%, you need to afford payments at 9.5%. This is the "stress test" shown above.

How does this compare to other countries?

Australia's 4.60% cash rate is above NZ (5.25%) but below the US Fed Funds (5.25-5.50%). The UK is at 5.00%. Australia's variable mortgage rates are among the highest in the developed world.

Fixed vs Variable Rates (February 2026)

Fixed Rate Pros

✓ Payment certainty for 1-5 years
✓ Currently lower than most variable rates
✓ Protection if rates rise further
✗ Break costs if you sell/refinance
✗ No benefit if rates fall

Variable Rate Pros

✓ Flexibility (extra payments, offset)
✓ Benefit if rates fall
✓ No break costs to refinance
✗ Payment uncertainty
✗ Currently higher than fixed

The Power of Offset Accounts

An offset account reduces the interest you pay by offsetting your loan balance:

Offset Balance	Monthly Savings	Annual Savings	Loan Term Saved
$10,000	$55	$660	~9 months
$30,000	$165	$1,980	~2.5 years
$50,000	$275	$3,300	~4 years
$100,000	$550	$6,600	~7 years

Based on $600K loan at 6.6% over 25 years

✅ Refinancing Checklist

☐Check your current rate vs market rates

☐Call your lender to negotiate first

☐Get your property valued

☐Calculate break costs (if fixed)

☐Compare at least 3 lenders

☐Review all fees (application, valuation, discharge)

☐Check if cashback offers apply

☐Calculate break-even (months to recover costs)

Australian Mortgage Statistics

$624K

Average Mortgage

5.8M

Mortgage Holders

$2.3T

Total Housing Debt

32%

Avg Income to Mortgage

Impact by State (Median Loan)

State	Median Loan	Monthly Increase	Annual Increase
NSW	$780,000	+$127	+$1,524
VIC	$620,000	+$101	+$1,212
QLD	$540,000	+$88	+$1,056
WA	$480,000	+$78	+$936
SA	$450,000	+$73	+$876

What is the APRA stress test buffer?

The Australian Prudential Regulation Authority (APRA) requires banks to assess your ability to repay at 3% above the product rate. This protects both borrowers and banks from rate shock.

Can I get hardship assistance?

Yes. If you're struggling, contact your lender immediately. Options include: reduced payments, payment pause, loan term extension, or switching to interest-only temporarily.

What's LVR and why does it matter?

Loan-to-Value Ratio (LVR) = Loan ÷ Property Value. Below 80% LVR means no LMI and better rates. As property values rise, your LVR improves, potentially unlocking better refinancing options.

🔗 Related Australian Calculators

Electricity Subsidy Disaster Recovery Stamp Duty Refinance Savings

Economist Rate Forecasts 2026

Bank	End 2026 Forecast	View
Westpac	4.35%	1 cut expected
CBA	4.35%	1 cut in Q4
NAB	4.60%	Hold through 2026
ANZ	4.60%	No change
Market Pricing	4.35-4.60%	Uncertain

Types of Mortgages in Australia

Standard Variable

Rate moves with RBA decisions. Usually highest rate but most features (offset, redraw, extra payments).

Basic Variable

Lower rate than standard but fewer features. May lack offset account. Good for simple loans.

Fixed Rate

Locked rate for 1-5 years. Certainty but break costs apply. Limited extra payment options.

Split Loan

Part fixed, part variable. Best of both worlds - some certainty plus flexibility.

Impact of Extra Repayments

Making extra principal payments on a $600K loan at 6.60% over 25 years:

Extra Payment	Time Saved	Interest Saved
+$100/month	3 years, 4 months	$89,400
+$250/month	6 years, 8 months	$175,200
+$500/month	10 years, 2 months	$268,800
+$1,000/month	14 years, 6 months	$374,400

Government Home Buyer Schemes

First Home Guarantee

Buy with 5% deposit, no LMI. 35,000 places annually. Income caps apply ($125K single / $200K couple).

Regional First Home

10,000 places for regional buyers. 5% deposit, no LMI. Must live/work regionally.

Family Home Guarantee

Single parents with dependents. 2% deposit, no LMI. 5,000 places annually.

First Home Super Saver

Save for deposit via super. Tax-effective. Up to $50K can be withdrawn.

Lenders Mortgage Insurance (LMI)

Required when borrowing more than 80% of property value. LMI protects the lender, not you:

LVR	$500K Property	$750K Property	$1M Property
85% LVR	~$4,500	~$7,000	~$10,000
90% LVR	~$12,000	~$18,000	~$25,000
95% LVR	~$22,000	~$35,000	~$48,000

LMI can be capitalized into loan but adds to interest

RBA Meeting Schedule 2026

Feb 3-4

+0.25% (done)

Mar 31 - Apr 1

Next meeting

May 19-20

Q2 decision

Jul 7-8

Mid-year

Aug 4-5

Post Q2 CPI

Sep 22-23

Q3 review

Nov 3-4

Post Q3 CPI

Dec 8-9

Year-end

📞 Key Resources

RBA: rba.gov.au
APRA: apra.gov.au

AFCA (Complaints): 1800 931 678
MoneySmart: moneysmart.gov.au

Warning Signs of Mortgage Stress

⚠️

Using credit cards for essentials

⚠️

Skipping bills to pay mortgage

⚠️

Dipping into savings regularly

⚠️

Can't cover unexpected expenses

If experiencing these, contact your lender about hardship assistance immediately.

💡 Quick Tips for Borrowers

✓ Review your rate annually - don't pay loyalty tax

✓ Keep emergency fund of 3-6 months expenses

✓ Max out offset account before investing

✓ Budget for potential rate rises

✓ Consider split loan for flexibility + certainty

✓ Check comparison rate, not just headline rate

Calculator last updated: February 3, 2026

Data reflects RBA decision announced today

Rates shown are indicative and vary by lender

Cash rate now at 4.60% - highest since December 2011

Next RBA meeting: March 31 - April 1, 2026

📚 Official Data Sources

Reserve Bank of Australia - Cash Rate

Official RBA cash rate target and historical data

Updated: 2026-02-04

RBA Monetary Policy Decisions

Official RBA monetary policy statements and decisions

Updated: 2026-02-04

RBA Statement on Monetary Policy

Quarterly economic outlook and policy analysis

Updated: 2026-02-04

APRA Monthly Banking Statistics

Official lender rate data and banking statistics

Updated: 2026-01-31

ABS Consumer Price Index

Official Australian inflation data

Updated: 2026-01-31

RBA Housing and Mortgage Data

Official housing market and mortgage statistics

Updated: 2026-01-31

Australian Taxation Office

Tax information and mortgage interest deductions

Updated: 2026-01-15

⚠️

Important Disclaimer

Disclaimer: This calculator provides estimates for educational purposes only. Actual repayments depend on your specific loan terms and product features. Interest rates are indicative and change frequently. This is not financial advice. Consult a licensed mortgage broker or financial adviser for personalized guidance. RBA decisions can be unpredictable. Past rate movements do not predict future changes. Individual circumstances vary widely. Banks may not pass on full rate changes immediately. Comparison rates include fees and charges and give a truer picture of loan cost. APRA serviceability buffer of 3% is applied by all regulated lenders. Contact AFCA (1800 931 678) for dispute resolution. This calculator assumes principal and interest repayments. Interest-only loans will have different payment amounts. LMI costs are not included in calculations. Check with your bank or broker for exact figures based on your circumstances. Property values and LVR calculations are estimates only. Get a formal property valuation for accurate figures. For financial hardship assistance, contact the National Debt Helpline on 1800 007 007. Free financial counselling is available across Australia. Visit MoneySmart.gov.au for more mortgage and financial resources.

Last verified: February 4, 2026 | Data source: RBA, APRA, ABS

Monthly Payment Increase

\text{\$}67.94

The RBA's 0.25% rate hike from 3.60% to 3.85% increases your monthly payment by $67.94. Annual impact: $815.23. Total additional interest over loan life: $20,380.67.

For educational and informational purposes only. Verify with a qualified professional.