Cash Rate at 4.35%: What It Costs the Average Australian Mortgage
ADS Team
Author
July 30, 2026
23 days ago
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In short: The RBA lifted the cash rate three times in 2026 — in February, March and May — taking it to 4.35% and reversing much of the 2025 easing cycle. Assuming full pass-through, those 0.75 percentage points added about $373 a month to a $750,000 mortgage, or roughly $4,500 a year. The Board's next decision is due 11 August 2026.
Key takeaways
- Three 2026 increases took the cash rate to 4.35%.
- Headline inflation re-accelerated to about 4.6% in the March quarter, above the RBA's 2–3% target band.
- The full 0.75 points adds roughly $249 a month on $500,000 and $498 on $1,000,000.
- Borrowers who kept repayments at 2024 levels through the 2025 cuts absorbed the reversal without a budget change.
What the cycle added, by loan size
| Loan balance | Before the cycle | After 0.75 points | Monthly increase | Annual increase |
|---|---|---|---|---|
| $400,000 | $2,528 | $2,727 | +$199 | +$2,388 |
| $500,000 | $3,160 | $3,409 | +$249 | +$2,988 |
| $650,000 | $4,108 | $4,432 | +$324 | +$3,884 |
| $750,000 | $4,740 | $5,113 | +$373 | +$4,481 |
| $1,000,000 | $6,320 | $6,818 | +$498 | +$5,975 |
Figures assume a 30-year principal-and-interest loan moving from 6.50% to 7.25% with full pass-through. Actual pass-through varies by lender.
Why did the RBA reverse course?
Headline inflation re-accelerated to around 4.6% in the March quarter, well above the 2–3% target band. When inflation moves away from target the Board's reaction function points toward tightening, regardless of the direction it was moving previously.
The awkward part for borrowers is that the 2025 easing cycle had already been priced into household budgets. Many households used the relief from those cuts rather than banking it, so the reversal landed on budgets with no buffer.
What to do before 11 August
- Model one more hike. Add roughly $16 per $100,000 of your balance to your current repayment and check it against your budget.
- Check your rate against new-customer pricing. The loyalty gap is frequently worth more than a single 0.25 point move, and closing it is free.
- Review your buffer. If a further increase would push you past comfort, act now rather than after the announcement.
- Contact your lender early if it is already tight. Hardship assistance is available before you default, not only after.
Frequently asked questions
When is the next RBA decision?
The Board's next scheduled decision is 11 August 2026. The RBA publishes its meeting calendar in advance, and decisions are announced along with a statement explaining the reasoning.
How quickly do lenders pass on a rate rise?
Most announce within days but apply the change two to four weeks later. Lenders are not obliged to pass on the full move, and pass-through on deposit rates frequently differs from pass-through on loan rates.
Should I fix now that rates have risen?
Fixed rates are priced off wholesale swap markets that already embed expected moves, so fixing after a rise is not automatically a bargain. It is a decision about wanting repayment certainty, weighed against losing offset access and extra-repayment flexibility.
Related reading
- How a 0.25% Rate Rise Changes Repayments, by Loan Size
- Fixed vs Variable in a Hiking Cycle: The 2026 Decision Framework
- Stress-Testing Your Own Budget at +3%
Sources
- Cash rate target and Board decisions — Reserve Bank of Australia
- Consumer Price Index, Australia, March quarter 2026 — Australian Bureau of Statistics
Rates checked as at 2 August 2026. Interest rates, lender policies and government schemes change frequently. Figures in this article are illustrative and were accurate at the date shown.
General advice warning: This article contains general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice. Consider whether it is appropriate for you and seek advice from a licensed credit representative before acting.
Any interest rate shown is an example only and is not an offer of credit. Where a rate is quoted, the applicable comparison rate is available from the relevant lender and should be considered alongside it.
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