The RBA has increased the cash rate by 25 basis points for the fifth time this year, with the target now sitting at 4.85%.
That’s the highest the rate has been since 2008, and interest rates on home loans, savings accounts, and term deposits will likely follow suit.
If you’re on a variable-rate home loan, your lender will almost certainly be in touch soon to let you know if your rate will increase by the full 0.25%.
Canstar analysis shows if you had a $700,000 mortgage with 25 years remaining as of February, a fifth 25 basis point hike could mean an extra $107 in monthly repayments if you were on an average rate at the start of the year.
Added on top of the year’s four previous rate hikes, you'd be paying more than $500 extra each month compared to January.
Over a full year, that's over $6,000, potentially making it even more important to check if you could save by refinancing.
The November move was a widely anticipated decision from the RBA, correctly predicted by all four big banks and the majority of cash rate futures traders, with inflation still stubbornly high.
The latest ABS data shows consumer prices rose 4.3% through the year to September 2026, while trimmed mean inflation (which adjusts for more volatile price changes) was 3.6%, well outside the RBA’s 2% to 3% target range.
That trimmed mean number is the one the RBA tends to pay most attention to and its pace hasn’t slowed much in recent months, growing nearly 1% from June to September, despite four cash rate hikes already this year. For reference, a quarterly pace of under 0.75% is consistent with 3% annual inflation.
Savings rates to keep climbing?
A lot of the focus after rate hikes tends to be on the added burden for mortgage holders and renters, but a higher cash rate also usually means better returns for savers.
It’s an often-overlooked part of how monetary policy works — higher savings rates encourage Aussies to save rather than spend, which can cool demand and ease inflationary pressure.
Canstar and RBA data suggests the average ongoing online savings account rate is already the highest since 2012, while the top returning products in the Canstar database cracked 6% p.a. after the last hike, and will likely go up again in the coming days.
However, banks are coming under increased scrutiny for how rate hikes are being applied to deposit products.
After the September hike the average maximum ongoing savings rate only increased by 20 bps according to Canstar research, less than the cash rate hike.
Experts also say savers should pay close attention to any conditions that might apply to an account’s top rate, with many of the highest returning products reverting to a paltry ‘base rate’ for customers who don’t meet bonus criteria in a given month.
Canstar analysis after the September hike found that while the maximum ongoing rate on bonus savings account products increased by an average of 0.20% to 4.97% p.a., the average base rate only increased 0.01%, from 0.20% to 0.21% p.a.
“Banks are becoming increasingly selective about which savings rates get a boost when rates rise” Canstar Data Insights Director Sally Tindall said.
“The bonus portion of savings accounts has generally been getting the biggest lift, while ongoing base rates have barely moved a muscle even after four rate hikes this year.”
“Canstar research shows 41% of customers with a bonus saver account are missing out on the maximum rate each month. That’s a pretty big chunk of savers who could be leaving money on the table.”
Say you’re earning 6% p.a. on a conditional rate product for a full year, but fail to meet the conditions in month three and six (maybe you don’t make enough transactions or fail to grow your balance) and find yourself earning a base rate of 0.20% p.a. in those months. Your effective rate for the year could drop to just above 5% p.a., in which case you might have been better off on a slightly lower, but unconditional maximum return.
“Bonus rates are a bit like a gym membership,” Canstar Finance Editor Brooke Cooper said. “A deal may look great on the day you sign up, but it only pays off if you actually turn up.
“So, before chasing the highest headline rate, be honest with yourself about whether you’ll meet the conditions month in, month out. A slightly lower rate you’ll actually earn can often beat a top rate if you only get it some of the time.”
Is this the final hike?
For now, all four major banks are officially predicting this will be the final rate hike of this cycle.
Most analysts agree the cash rate is now firmly ‘restrictive’, or high enough to bring down people’s spending and (hopefully) inflation.
The monetary policy board might also now be paying close attention to the possibility of a significant economic downturn that could seriously hurt regular Australians.
While Australia’s unemployment rate is currently at its highest level since late-2021, 4.7%, RBA Assistant Governor Sarah Hunter last week said the board isn’t forecasting a near-term recession.
However, if the national accounts (official figures on how fast the economy is growing, to be released ahead of the RBA’s December decision) show a significant downturn in economic growth in Australia, the RBA might face a delicate balancing act between getting inflation under control and protecting jobs and growth.
