In short:
The Reserve Bank of Australia has increased the official cash rate to 4.85% on 3 November 2026, its fifth rate rise this year and the highest level since 2008. The decision adds pressure on mortgage holders, property buyers and businesses as the RBA continues its efforts to bring inflation under control.
More Interest Rate Pain
The Reserve Bank of Australia has lifted interest rates to their highest level in 18 years, delivering another financial blow to mortgage holders and businesses already struggling with rising costs.
The RBA increased the official cash rate by 0.25 percentage points to 4.85 per cent on 3 November, marking its fifth increase this year and the highest rate since 2008.
The decision follows persistent inflationary pressures, with annual inflation reaching 4.3 per cent in September, well above the RBA’s target range of 2 to 3 per cent.
Mortgage Holders Face Growing Pressure
Homeowners with large variable-rate mortgages are among those hardest hit, particularly recent buyers who purchased properties at elevated prices.
According to financial comparison service Canstar, the latest increase could add approximately $92 to monthly repayments on a $600,000 mortgage, assuming lenders pass on the full increase.
Combined with the previous four increases this year, repayments on that loan could rise by approximately $456 per month.
Higher borrowing costs are also placing pressure on property prices, reducing purchasing power and making it more difficult for prospective buyers to secure finance.
Small businesses face similar challenges, with higher loan repayments and reduced consumer spending threatening profitability, investment and employment.
The RBA’s Inflation Battle
The central bank’s objective is to bring inflation back within its target range by reducing demand across the economy.
Higher interest rates discourage borrowing and spending, theoretically easing pressure on prices.
However, the strategy carries significant risks.
Prolonged financial pressure could further weaken economic growth, increase unemployment and deepen the downturn in Australia’s property market.
The challenge is particularly complicated by global energy prices and supply disruptions, which interest rate increases cannot directly control.
For households and businesses, the outlook remains uncertain.
Further increases remain possible if inflation persists, with the RBA attempting to restore price stability without pushing the economy into recession.
