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The Monetary Policy Board of the Reserve Bank of Australia (RBA) has today (3 November) lifted the official cash rate by 25 basis points, pushing borrowing costs to their highest level since 2008.
As widely expected, the central bank has moved to lift the cash rate to 4.85 per cent for its Melbourne Cup day decision.
The decision marks the central bank’s fifth rate hike of 2026 and takes the official cash rate to its highest level since the global financial crisis of 2008.
The move follows hotter-than-expected September-quarter inflation data released by the Australian Bureau of Statistics (ABS), which showed annual trimmed mean inflation accelerated to 3.7 per cent, well above the RBA’s 3.4 per cent forecast and outside its 2–3 per cent target band.
Headline inflation also surged to 4.3 per cent, driven by a 9.4 per cent jump in petrol prices.
Ahead of the meeting, all four major banks had redrawn their forecasts to predict a Cup Day increase to 4.85 per cent. Last week, both the Commonwealth Bank of Australia and National Australia Bank abandoned their hold forecasts to join Westpac and Australia and New Zealand Banking Group in predicting a rate rise.
Money markets had also priced in an 88 per cent probability of a hike ahead of today’s announcement, particularly as governor Michele Bullock recently noted to a Senate estimates committee that international and domestic upside risks to inflation had materialised, while deputy governor Andrew Hauser characterised recent inflation figures as “too high”.
In its post-meeting statement, the RBA Monetary Policy Board said: “Since the previous meeting, the data have confirmed that underlying inflation remains broadly based. Capacity pressures appear a little tighter than previously estimated and there are indications that higher fuel prices are being passed through to prices of other goods and services. Inflation is now expected to remain above 3 per cent for the coming year and there is an increasing risk that higher inflation expectations will become embedded.
“The board is conscious of the period in which inflation has been too high. Given the revised inflation outlook and the continuing upside risks, the board judged that a further tightening in financial conditions is warranted to support the return of inflation to target.
“The board will continue to do what it considers necessary to bring inflation sustainably back to target. Accordingly, the board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions. Monetary policy is well placed to respond to developments, and the board is focused on its mandate to deliver price stability and full employment.”
Today’s policy decision was by majority: six members voted to increase the cash rate target by 25 basis points to 4.85 per cent; three members voted to leave the cash rate target unchanged at 4.60 per cent.
Brokers will be needed more than ever
The increase to the cash rate will result in variable-rate borrowers paying more on their home loan repayments in the coming weeks, as lenders pass through the rate increase.
According to analysis from the Mortgage and Finance Association of Australia (MFAA), the average new owner-occupier loan of $731,000 would need to pay an additional $119 on their monthly repayment as a result of the November rate decision.
Across the five rate increases in 2026, cumulative repayments have risen by roughly $537 per month, or nearly $6,450 annually.
Data from REA Group indicates mortgage repayments on a median-priced dwelling will now absorb roughly 37.4 per cent of typical household income, a serviceability burden not seen since the late 1980s.
Reacting to the news, MFAA chief executive Anja Pannek stated that the higher rate environment would be unfamiliar territory for many newer borrowers.
“Every household will experience this decision differently. A positive step borrowers can take today is to understand what it means for their repayments, their budget and their plans,” she said, highlighting that brokers can help borrowers better understand their borrowing positions and, where repayment assistance is needed, engage with their lender early.
“For prospective buyers, the conversation starts with what they can comfortably afford, alongside what they may be eligible to borrow,” Pannek said.
“For existing home owners, a broker can explore a more competitive rate with their current lender or assess whether refinancing makes financial sense.
“Where refinancing is not suitable or available, that conversation still has value,” she said, flagging that the MFAA’s August Market Sentiment Survey revealed that 96 per cent of brokers had helped secure a discount for their clients in the previous six months, while 95 per cent had assisted with refinancing.
Speaking of the rate decision, the CEO of the Finance Brokers Association of Australia, Leo Gagic, lamented the impact on borrowers – but also flagged the value of a broker’s service.
“For many Australians, a rate rise isn’t simply another adjustment to their repayments. It’s another squeeze on already stretched household finances, discretionary spending and their ability to plan for the future,” he said.
“For finance brokers, it reinforces just how important our industry has become. Brokers are often the first point of contact when consumers need guidance, reassurance and options. Whether it’s reviewing existing lending arrangements, refinancing, restructuring or simply helping clients understand their position, the value of good advice and genuine relationships has never been greater.”
He added: “One thing remains clear: when the economic environment gets tougher, the value of a good finance broker becomes even more important.”
Gagic also reflected that the rise in interest rates would also place “pressure” on brokers and their businesses.
“Navigating changing lender policies, tighter serviceability requirements, reduced borrowing capacity, and increasingly cautious consumers requires resilience, adaptability and strong business foundations,” he said.
More to come.
[Related: All bets on for a cash rate hike]
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