Interest Rates on a Knife's Edge

What September's RBA Decision Could Mean for Your Mortgage

Every mortgage holder in Australia is asking the same question right now: is the Reserve Bank about to raise rates again? On 29 September 2026, the RBA's Monetary Policy Board will hand down a decision that the big four banks themselves can't agree on. NAB is now forecasting a rate rise. CBA and ANZ think it's more likely to happen in November. Westpac believes rates will hold steady for the rest of the year. When the banks that set your interest rate can't agree on where it's heading, it pays to understand what's driving the uncertainty, and what it could mean for your repayments either way.

The RBA held the cash rate steady at 4.35 per cent at its August 2026 meeting, its most recent decision before September. Annual inflation eased to 3.5 per cent in the twelve months to July, down from 3.8 per cent in June, according to the Australian Bureau of Statistics. However, trimmed mean inflation, the measure of underlying inflation the RBA watches most closely, held steady at 3.6 per cent. Both figures remain above the RBA's target band of 2 to 3 per cent.

That combination, headline inflation easing but core inflation stuck, is exactly why the major banks are split on what happens next. NAB has pencilled in a 0.25 percentage point rise to 4.6 per cent at the September meeting. CBA and ANZ also expect a rise, but not until November. Westpac expects no change at all for the remainder of 2026. The RBA itself has said financial conditions have tightened following earlier rate rises this year, and that it retains scope to lift rates further if inflation risks materialise.

For a borrower with a $600,000 mortgage, a 0.25 percentage point rise translates to roughly $91 extra a month if passed on in full, a modest but noticeable difference that adds up over a year. Whichever way the RBA moves in September, the sensible response is the same: understand your options now rather than reacting after the decision is made.

Why the Big Four Can't Agree

The disagreement among Australia's major banks comes down to timing, not direction. All four expect the RBA to remain vigilant on inflation, and none are forecasting a rate cut in the near term. The difference is whether the RBA acts in September, waits until November, or holds off altogether.

NAB's case for a September move rests on the July inflation print landing higher than expected, with trimmed mean inflation showing no signs of easing. CBA and ANZ take a similar view on the direction of travel, but expect the RBA to wait for the additional data due between meetings, including the ABS's August inflation figures, released the day after the September meeting, before acting. Westpac's more cautious stance reflects a view that the economy is already slowing as a result of the rate rises delivered earlier in 2026, reducing the need for further tightening.

The RBA's own August statement acknowledged both sides of this argument. It noted that the economy appeared to be slowing as expected following earlier rate increases, while also flagging that inflation remained too high and that it could act again if upside risks to inflation materialise.

What This Means If You're on a Variable Rate

If your mortgage is on a variable rate, a September or November rise would flow through to your repayments within weeks of any RBA decision, as it has with previous increases in 2026. The practical question isn't just whether rates will rise, but whether your current loan is still competitive regardless of which way the RBA moves.

Many borrowers who took out or last reviewed their home loan more than a year or two ago are on rates that no longer reflect what's available in the market today. A rate review costs nothing and can be done well ahead of any RBA decision, giving you options rather than leaving you to react after the fact.

What This Means If You're Coming Off a Fixed Rate

Borrowers coming to the end of a fixed-rate term face a different kind of exposure. Moving onto a lender's standard variable rate at the end of a fixed period can mean a larger jump in repayments than a single RBA rate movement, particularly if the fixed rate was locked in some years ago at a lower level.

If your fixed term is ending in the next three to six months, it's worth reviewing your refinancing and repricing options before that date arrives, rather than waiting to see what happens on 29 September and beyond. Locking in certainty, or deliberately choosing to stay variable to retain flexibility, is a decision best made with time to compare the full market, not under pressure once a change is announced.

What This Means for Borrowing Capacity

Every home loan application in Australia is currently assessed using APRA's mortgage serviceability buffer, which requires lenders to test whether a borrower could still meet repayments if their interest rate rose by at least three percentage points above the loan rate. That buffer, set independently of the RBA's cash rate decisions, is a bigger driver of how much you can borrow than any single rate movement.

This matters for first home buyers and upgraders weighing up a purchase in the months ahead. If you're planning to buy, understanding how a potential rate rise interacts with the existing serviceability buffer, and what that means for your maximum borrowing capacity, is worth doing before you start house hunting rather than after you've found a property.

Interest rate uncertainty isn't something you can control, but how prepared you are for it is entirely within your hands. Whether you're on a variable rate wondering if it's time to shop around, coming off a fixed term in the months ahead, or planning a purchase and want to understand your borrowing capacity before you start looking, the team at Key Change Finance is here to talk through your options with the full picture in front of you.

Get in touch with us to review where you currently stand and what your choices look like, whatever the RBA decides on 29 September.

Frequently Asked Questions

When is the next RBA interest rate decision?

The Reserve Bank of Australia's Monetary Policy Board meets on 29 September 2026 to hand down its next cash rate decision. The RBA held the cash rate at 4.35 per cent at its previous meeting in August 2026.

Will interest rates go up in September 2026?

It's uncertain. NAB is forecasting a 0.25 percentage point rise to 4.6 per cent at the September meeting. CBA and ANZ expect a rise but think it's more likely in November. Westpac expects the RBA to hold rates steady for the rest of 2026. The decision will depend heavily on the inflation data available to the RBA at the time, including the ABS's August CPI figures due for release the day after the meeting.

How much would a 0.25 percentage point rate rise cost me?

On a $600,000 mortgage, a 0.25 percentage point increase adds approximately $91 to monthly repayments if passed on in full by your lender. The exact figure depends on your loan balance, interest rate, and remaining loan term.

Should I fix my interest rate before the RBA's September decision?

There's no single right answer, as it depends on your risk tolerance, how long you plan to hold the loan, and the fixed rates currently on offer compared to your existing variable rate. It's worth reviewing your specific situation with a broker who can compare fixed and variable options across multiple lenders rather than guessing at the RBA's next move.

What is the APRA mortgage serviceability buffer and how does it affect me?

APRA requires lenders to assess new borrowers' ability to repay their loan at an interest rate at least three percentage points above the actual loan rate. This buffer currently sits at 3 percentage points and directly affects how much you can borrow, independent of any RBA cash rate decision.