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05/02/2026
The Reserve Bank of Australia (RBA) has today lifted the cash rate by 0.25%, taking it to 3.85%. This decision follows higher‑than‑expected inflation for the December 2025 quarter, with headline inflation reaching 3.8%. The rate rise places Australia among the few advanced economies tightening monetary policy this month, at a time when many others have paused or cut rates. [realestate.com.au]
If you have a variable home loan, your lender is likely to pass on this increase. This means your minimum monthly repayment will rise. For example, a 0.25% increase typically adds around $75 per month to a $500,000 loan, based on average variable rate modelling. [domain.com.au]
Let’s say a household in Melbourne has a $650,000 variable mortgage with 25 years remaining. Before the rate rise, their monthly repayment may have been approximately $4,100. A 0.25% increase could lift that by roughly $95–$110 per month, depending on their lender. For a family already balancing rising living costs, this change may require adjusting the household budget—reducing discretionary spending, reviewing subscriptions, or revisiting savings plans.
Higher interest rates also reduce how much a bank is willing to lend. Economists note that higher rates typically reduce borrowing capacity and may affect the confidence of buyers entering the market. [realestate.com.au]
You can estimate your updated loan repayments using trusted Australian calculators:
If today’s rate rise leaves you unsure about your next steps, our mortgage experts and financial advisers can review your loan, compare options across lenders, and help you secure the most suitable solution for your situation.
For a free, no-obligation 15-minute online consultation, book online using the link below or request a callback at 1300 726 082.
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