The Full Effect of the RBA's Four 2026 Rate Hikes
The cash rate has climbed a full percentage point since January, from 3.60% to 4.60%, the highest level since 2011. With a fifth hike now live on the table for 3 November, here is exactly what the four hikes so far have actually cost borrowers, and what they have done to mortgage stress nationally.
How much have 2026's RBA rate hikes cost borrowers?
The RBA raised the cash rate four times in 2026, in February, March, May and September, each by 0.25 percentage points, taking it from 3.60% to 4.60%, a full 1 percentage point increase and the highest level since 2011. On a $600,000 mortgage, that has added roughly $360 a month, or $4,320 a year, to repayments. On a $1 million loan, the increase is around $606 a month, or over $7,270 a year. The cumulative effect has pushed mortgage stress to an 18-year high, with 32.3% of mortgage holders now classified as at risk.
Key Takeaways
- 1The RBA raised the cash rate four times in 2026 (February, March, May, September), a cumulative 1 percentage point increase, from 3.60% to 4.60%, the highest since 2011.
- 2On a $600,000 mortgage, the four hikes have added approximately $360 a month ($4,320 a year); on a $1 million loan, approximately $606 a month ($7,272 a year).
- 3Mortgage stress reached an 18-year high of 32.5% in July 2026, easing only slightly to 32.3% in August, up 8.4 percentage points since January.
- 4All big four banks passed the September hike on in full within weeks, and 21 lenders lifted fixed rates, pushing all fixed pricing above 6% for the first time this cycle.
- 5APRA has kept its mandatory 3% serviceability buffer unchanged, meaning new borrowers are now assessed at roughly 9.25% for owner-occupier loans and 9.60% for investment loans.
- 6Each hike is passed through to variable-rate borrowers almost immediately, while new borrowers face a cumulative hit to maximum borrowing capacity on top of higher repayments.
Four Hikes, One Percentage Point, Since January
The Reserve Bank started 2026 with the cash rate at 3.60%. Four hikes later, each a standard 0.25 percentage point move, it sits at 4.60%, the highest level since late 2011, more than 15 years ago.
The 2026 Cash Rate Path
Four hikes, two holds, one percentage point higher
The RBA held in June and August between hikes, but has ultimately moved in only one direction all year, consistent with the Board's stated willingness to raise rates further "if needed."
The Board has cited persistently elevated inflation, including global energy price pressure and strong domestic demand, as its reasoning throughout the cycle.
What Four Hikes Have Actually Cost Borrowers
The dollar impact scales directly with loan size, and the cumulative effect across four hikes is now substantial for every borrower on a variable rate.
Cumulative Extra Monthly Repayment Since January 2026
By loan size, variable rate
A borrower on a $1 million loan is now paying over $7,270 a year more than they were in January, before accounting for any further move in November.
| Loan size | Extra per month | Extra per year |
|---|---|---|
| $600,000 | $360/month | $4,320/year |
| $700,000 | $424/month | $5,088/year |
| $750,000 | $454/month | $5,448/year |
| $1,000,000 | $606/month | $7,272/year |
Variable-rate borrowers feel each hike almost immediately, since banks typically pass rate rises through in full within a few weeks of an RBA decision.
Mortgage Stress at an 18-Year High
The repayment numbers translate directly into real financial pressure. Roy Morgan's mortgage stress tracker, which measures the share of mortgage holders spending more of their income on repayments than their circumstances comfortably allow, has climbed to levels not seen in 18 years.
Mortgage Stress Trend Through 2026
Share of mortgage holders at risk
The jump from 24.7% in January to over 32% by mid-year tracks the hike schedule almost exactly, with stress easing only marginally even during the June and August holds.
Projected to climb further in October
With the September hike only recently passed through to borrowers, projections point to mortgage stress climbing to around 33.1% in October, equivalent to roughly 1.8 million mortgage holders, before any potential fifth hike in November is even factored in.
Banks Passed Every Hike Through in Full
Unlike some rate cycles where lenders absorb part of a move or delay passing it on, 2026 has seen near-universal, rapid repricing across the market.
Following the September hike alone, 40 lenders, including all four major banks and their subsidiary brands, passed the increase through in full, and 21 lenders lifted their fixed rates, pushing fixed pricing above 6% across the board for the first time this cycle. In total, 375 separate variable and fixed rate changes were applied by lenders in response to that single decision. For the latest detail on fixed pricing specifically, see our fixed rate update.
Why New Borrowers Are Hit Twice
Existing borrowers feel higher rates through higher repayments. New borrowers feel the hikes a second way, through reduced borrowing capacity, because of how APRA's serviceability buffer works.
Actual Rate vs Assessed (Stress-Test) Rate
With APRA's mandatory 3% buffer applied
APRA has held the buffer at 3% despite the rate cycle, meaning every RBA hike flows directly through to a higher assessment rate and, in turn, a lower maximum loan amount for new applicants.
The buffer is a deliberate, unchanged setting
APRA requires lenders to assess new loan applications at the actual offered rate plus a 3 percentage point buffer, regardless of where the cash rate sits. That means owner-occupiers are now effectively stress-tested at around 9.25%, and investors at around 9.60%. Analysis suggests even a 0.5 percentage point reduction in the buffer could lift national borrowing capacity by hundreds of billions of dollars, underscoring just how binding the current setting has become this late in the hike cycle.
Use our borrowing power calculator to see exactly how the current rate and buffer settings affect what you can borrow today.
Frequently Asked Questions
Raj Bhangu
Principal Mortgage Broker, iSmart Finance Group
Raj Bhangu is the principal broker at iSmart Finance Group, specialising in home loan finance and helping clients navigate RBA rate cycles and lender policy changes across Sydney and beyond.
Sources & References
This article references information from the following authoritative sources:
- RBA Hikes Cash Rate to 4.6 Per Cent in Fourth Rate Rise of 2026ABC News
- A Fourth Cash Rate Hike in 2026: What Borrowers Need to KnowCanstar
- Mortgage Stress Risk, August 2026Roy Morgan Research
- APRA Maintains Current Macroprudential Policy SettingsAPRA
- Lenders Pass on RBA Hike as Fixed Rates Clear 6%Australian Broker
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Our content is based on industry expertise, regulatory guidelines from ASIC and APRA, and data from the Reserve Bank of Australia. All information is current as of the publication date and subject to change.