RBA Hikes to 4.85%: What the 18-Year High Means for You

On Tuesday 3 November 2026, the Reserve Bank of Australia raised its official cash rate for the fifth time this year — a 25-basis-point move to 4.85%, the highest the cash rate has reached since the Global Financial Crisis era of 2008. If you're an Australian borrower, your mortgage is about to get more expensive. If you're a saver, there's a silver lining: top savings rates could soon touch 6.50%. Here's what the decision means and what to do about it.

What just happened

The RBA's monetary policy board voted on Melbourne Cup Day to lift the cash rate from 4.60% to 4.85%, in a split 6–3 decision — a sign the board itself is not fully convinced about the path ahead. Three-quarters of Finder.com.au's expert panel had predicted the hike, so markets largely saw it coming. But "expected" doesn't mean painless.

Lenders are now widely expected to pass the full increase on to variable-rate borrowers in the coming days, with the new repayments typically taking effect from mid-December.

Why the RBA did it: inflation isn't playing ball

The Reserve Bank has one blunt job description in its sights right now: get inflation back to its 2–3% target band. The latest monthly inflation data showed annual inflation at 4.3% — and speeding up, not slowing down. The RBA's preferred trimmed-mean measure sits around 3.6%, still well outside target, and this is now the 14th consecutive month that inflation has sat outside the band.

As realestate.com.au economist Angus Moore put it: "The RBA is yet to be convinced that inflation will return sustainably to target without further tightening." Hawkish commentary from Governor Michele Bullock in the weeks before the meeting had already cemented the hike in analysts' minds.

The 4.85% cash rate is a level Australian borrowers haven't seen in 18 years. In 2011 the cash rate spent most of the year at 4.75% — and before that you have to go back to the Global Financial Crisis.

What it costs borrowers: the numbers

Five hikes in one year compound fast. Finder.com.au's breakdown shows that if your variable home-loan rate was around 5.0% in January 2026, it's now heading toward 6.25%. For the average Australian home loan of about $730,000 over 30 years:

Loan scenario	Monthly repayment
$730,000 loan at 5.00% (start of 2026)	$3,919
$730,000 loan at 6.25% (after 5 hikes)	$4,495
Difference from the year's five hikes	+$576 per month
$750,000 loan, today's 0.25% hike alone	~+$120 per month

Capital-city medians show the spread: a median-priced home in Sydney faces about $154 more per month from this single hike, Brisbane about $134, and Melbourne about $107.

It's no surprise that 35% of Australian borrowers now say they're struggling with home-loan repayments in Finder's consumer sentiment tracker — and that's before this fifth increase lands.

The silver lining for savers

Every rate rise that punishes borrowers rewards savers. Banks will lift deposit rates after the RBA's move, and Finder notes that top savings rates could soon reach 6.50% — a level that turns idle cash into a meaningful earner.

If you've been sitting in a big-bank account earning a fraction of the headline rate, this is your cue to shop around. Many "6%+" offers are base-plus-bonus structures requiring a monthly deposit or balance growth — the rate you actually earn matters more than the advertised one.

The outlier central bank: Australia is hiking while others pause

What makes this story remarkable is how lonely the RBA looks right now:

• United States: the Federal Reserve held rates at 3.75–4.00% at its October meeting, with its next decision due 8–9 December.
• United Kingdom: the Bank of England holds at 3.75% and decides on Thursday 5 November, with markets split between a hold and a hike.
• Australia: hiking for the fifth time in 2026, to an 18-year high.

Diverging central banks usually mean diverging currencies and economies — the RBA is fighting a domestic inflation fire that the US and UK appear to have under better control. For Australians, the practical message is simpler: your cost of money is rising while much of the developed world stands still.

What to do now: five moves before Christmas

1. Audit your home loan. Compare your current variable rate against advertised rates. Even a 0.2% difference on a $600,000 loan saves roughly $1,200 a year. Use the broker review Waldron recommends — or your lender's retention team, which often has discounts it won't advertise.
2. Feed your offset account. Money sitting in an offset reduces the interest you pay at your home-loan rate — currently the best risk-free "return" an Australian mortgage holder can get.
3. Renegotiate or fix a portion. Some borrowers split their loan: part variable (for offset benefits), part fixed (for certainty). Do the maths on break costs before changing a fixed loan.
4. Chase the savers' market. If you have emergency funds or a house deposit sitting at a big-bank headline rate, compare high-interest savings accounts now — the 6.50% tier won't be around forever, and introductory bonuses expire.
5. Talk to your lender early if you're struggling. You're far from alone — 35% of borrowers report strain. Lenders have hardship options, and the earlier you call, the more choices are on the table. Waiting until you miss a repayment narrows them.

What's next: December 8 and beyond

The final RBA decision of the year lands on 8 December. Coming into this week, Australia's big four banks had largely expected just one more hike for 2026 — and they've got it. Whether there's another in December will depend on inflation data, Christmas spending (which the RBA fears could add fuel), and economic growth, which Commonwealth Bank now expects to fall to just 1% a year by mid-2027.

There is ballast beneath the anxiety: mortgage arrears remain low, few borrowers are in negative equity, and many households still hold substantial repayment buffers. Home values have fallen 4.3% since March — painful for sellers, but a modest affordability gain for buyers waiting in the wings.

Frequently asked questions

When will my repayments go up?

Lenders typically announce their response within days of an RBA decision, and new variable repayments usually take effect from mid-December. Check your lender's announcement and your online banking — don't wait for the statement.

Is this hike definitely the last of 2026?

Not necessarily. The RBA decides on 8 December, and a split 6–3 board plus stubborn 4.3% inflation means another move is possible. Analysts were pricing the November hike at over 80% before it happened; the December meeting is genuinely live.

I'm a renter — does this affect me?

Indirectly. Higher rates raise landlords' costs, which can flow into rents, and they shrink house prices and borrowing capacity — which matters if you're saving a deposit. The saver upside applies in full: renters with cash benefit from higher deposit rates.

Should I fix my rate now?

There's no universal answer. Fixing buys certainty; staying variable keeps offset benefits and usually costs less when rates eventually fall. Compare fixed rates against your discounted variable offer — and never pay a fixed-rate break cost without calculating the payback period first.

Rate cycles turn — the only question is when. Borrowers who audit, offset and negotiate now will feel the eventual downswing first. Savers should enjoy the rare moment when holding cash is genuinely rewarded.