What’s happening with interest rates?

The RBA passed down its fourth hike of 2026, lifting the cash rate by 25 basis points to 4.60%, on 29 September. It followed upwards moves in February, March, and May.

The movements were in response to inflation, which has remained stubbornly high — referred to as ‘sticky’ — thanks in large part to global pressures like conflict in the Middle East, which has driven up fuel prices, and demand for AI, driving up the cost of tech products.

“The three increases in the cash rate target since the beginning of the year have tightened financial conditions and the economy appears to be slowing,” the RBA board’s latest post-meeting statement reads. “But inflation is still too high.”

The board also warned it would do “what it considers necessary” to tame inflation, even if that means hiking again in the near-enough future.

But if we look back at mid-2025, we’d see a vastly different environment. The RBA cut the cash rate to as low as 3.60% in 2025, off the back of a series of post-pandemic hikes passed through 2022 and 2023.

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Rate changes for Owner Occupier Variable

Home Loan Rates

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Table last updated 9 October 2026. Table sort order based on latest known owner occupier variable rate change by big four banks, then alphabetically. Excludes intro rates, green or eco loans. Lowest rates listed reflect current variable interest rates, plus 25 basis points unless specified by the lender.

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Why do interest rates change?

The RBA is Australia’s central bank. The bank and its Monetary Policy Board must follow a specific charter, which includes maintaining stable employment and keeping inflation, specifically ‘trimmed mean’ inflation, within what’s called the ‘target band’ of 2% to 3%.

The board’s only tool to maintain stability is raising or lowering the cash rate. It meets regularly to assess a large range of data and make a decision to either hike, hold, or cut the cash rate.

Why do interest rates change? In simple terms:

  • When inflation is too high, the RBA may raise rates to slow spending and borrowing.

  • When the economy weakens, it may cut rates to encourage households and businesses to spend and invest.

How do cash rate changes impact your home loan?

The cash rate, which is set by the Monetary Policy Board, is essentially the rate of interest that banks and lenders have to pay when they borrow money from other banks or lenders. 

When the cash rate goes up, so does the amount of interest banks have to pay. This impacts the amount of money that you, as their customer, will then have to pay for borrowing from them in the form of a loan.

Changes to the cash rate can flow through to the interest rates banks offer on a range of products, including:

  • Home loans: Variable mortgage rates often rise or fall after RBA decisions, affecting monthly repayments.

  • Savings accounts and term deposits: Higher rates may mean better returns for savers, while cuts can reduce interest earned.

However, banks are not required to pass on rate changes in full, meaning the impact on borrowers and savers can vary between lenders.

Find out how these cash rate changes impact your home loan.

How can I compare home loans? 

With rates changing, it pays to check whether your mortgage is still giving you the best bang for your buck.

Canstar makes it easy to compare home loans from a wide range of lenders, so you can see at a glance how interest rates, fees, and features stack up.

A few things to keep in mind when comparing:

  • Interest rate: Even a small difference can add hundreds to your repayments over time.

  • Comparison rate: This includes certain fees and charges, giving you a clearer picture of the loan’s true cost.

  • Fees: Watch out for application, ongoing, or discharge fees—they can sneak up on you.

  • Features: Things like offset accounts, redraw facilities, or extra repayment options can make a big difference in the long run.

A quick comparison could reveal a home loan that’s cheaper, more flexible, or just better suited to your situation.

Compare Home Loan Rates