The Reserve Bank of Australia has increased the cash rate by 0.25 percentage points to 4.60%, adding further pressure to households managing mortgage repayments alongside rising living costs. The decision was announced on 29 September 2026.
For borrowers, the immediate concern is how much more they may need to find each month. For people with savings, higher rates may offer an opportunity to earn more interest, depending on whether banks pass on the increase.
Ben Sutherland, Financial Adviser & Partner at Halpin Wealth, says the impact will depend on each person’s circumstances.
“When you’re already managing a tight household budget, another increase can feel significant,” Ben says. “The first step is to understand what it means in dollar terms for you, and whether you need to adjust your cash flow.”
Why have interest rates increased?
The RBA is seeking to bring inflation sustainably back within its 2–3% target range. In the statement accompanying its decision, the Board highlighted continued price pressures and indicated it was prepared to increase rates further if needed.
Higher interest rates are intended to slow spending and borrowing, helping ease demand across the economy. For households with a mortgage, however, that process can place additional strain on the budget.
“Inflation also puts pressure on people’s finances because their money buys less,” Ben says.
“That can be particularly challenging in retirement, when people are relying on their savings to support them over many years.”
For mortgage holders, start with your repayments
If you have a variable-rate mortgage, check whether your lender is changing your rate, when the change takes effect and what your revised repayments will be.
Reviewing your budget using the new repayment amount can help identify any shortfall early. If you are approaching the end of a fixed-rate period, it is also worth understanding what repayments could look like when that period ends.
“This is a useful time to review your loan with your lender or mortgage broker and check whether it remains competitive,” Ben says.
“You also want to understand how much breathing room you have after repayments and essential expenses.”
If repayments are becoming difficult to manage, contacting your lender early can help you explore the support available.
For savers, check what your account is paying
Higher interest rates may improve returns on savings accounts and new term deposits, but increases are not necessarily passed on automatically or in full.
Check the rate you are receiving, along with any conditions you need to meet to qualify for bonus interest. With term deposits, consider when you may need access to the money before committing to a fixed term.
“A higher savings rate can be welcome, particularly for retirees who use cash to help fund everyday expenses,” Ben says. “It is still worth considering the effect of inflation and tax on that return, and how much money you need readily available.”
Keep investment decisions connected to your goals
Interest-rate changes can affect investment markets and the relative appeal of different assets. A more attractive cash return may prompt a review, but any changes should take account of your investment timeframe and income needs.
“Before changing your investments, revisit what the money is for and when you expect to need it,” Ben says. “Those questions help you assess whether a change supports your goals and what trade-offs it might involve.”
Plan for uncertainty
The path of interest rates remains uncertain. Allowing for the possibility that borrowing costs stay elevated can help you assess whether your current arrangements remain manageable.
“You don’t need to predict the next RBA decision to take a useful step today,” Ben says. “Understanding your cash flow and reviewing the assumptions in your financial plan can help you make informed decisions as circumstances change.”
If you would like to understand how higher interest rates affect your financial position, speak with your Halpin Wealth adviser.
Have a mortgage and unsure whether your rate is best it can be?
Brenton Moyle at Charter Capital is available to review your home loan.
Email: brenton.moyle@chartercf.com.au
Phone: 08 8104 9112
For guidance on how higher interest rates affect your broader financial position, speak to the team at Halpin Wealth.