RBA November 2026 Rate Decision: A Hike to 4.85% Is Now the Base Case. What It Costs Investors

Published 31 October 2026 · Information current as at 30 October 2026 (market pricing: ASX RBA Rate Tracker, 29 October close; bank calls: 28 October; CPI: 28 October; housing data: September 2026) · The RBA announces its decision at 2:30pm AEDT on Tuesday 3 November, with its new Statement on Monetary Policy

Key takeaways

• The decision is due at 2:30pm AEDT on Tuesday 3 November 2026, with new RBA forecasts. A rise to 4.85% is the base case for all four majors after the ABS reported a 1.0% rise in the September-quarter trimmed mean, above the RBA's 0.8% forecast (as reported by AAP).
• The cost is quantifiable. On our model, +25bp adds $104, $156 and $208 a month to interest-only loans of $500,000, $750,000 and $1 million. If Tuesday's rise goes ahead, this year's five rises total $521, $781 and $1,042 a month on the same loans.
• Rent covers less of the interest. Darwin (6.5%) is the only capital whose gross yield for all dwellings (Cotality, September 2026) clears the roughly 5.7% needed to cover interest on an 80% interest-only loan at about 7.07%. That is a gross interest-cover test, not total cash flow.
• Whether 4.85% is the peak is open. NAB expects the RBA to "likely pause post November"; Westpac says the risks of another hike, "most likely in February", have increased; CBA has cuts pencilled in for August and November 2027 if inflation progresses.
• Our planning assumption: test holdings at your current rate plus about 0.75 points. The methodology box explains the margin.

Will the RBA raise rates on Melbourne Cup day?

The cash rate is 4.60%. It started 2026 at 3.60% and rose in February (3.85%), March (4.10%), May (4.35%) and September (4.60%), with holds in June and August (RBA cash rate history). A rise on Tuesday would be the fifth this year and would take the cash rate to its highest level since 2008. November is a forecast meeting, so the decision comes with a new Statement on Monetary Policy: fresh projections for inflation, unemployment and growth, and the market cash-rate path they assume.

Where forecasters stand after the CPI (dated)

Source: each bank's own note or newsroom article, linked in the first column; ANZ's call as reported by The Adviser, 28 October 2026; market pricing from the ASX RBA Rate Tracker, 29 October 2026 close. An implied yield is the market's expected average cash rate for the month, not a forecast or guarantee; February's 4.90% puts some chance on a further rise.

How expectations moved in five weeks

The RBA raised the cash rate on 29 September in a unanimous decision. Its statement said that "some of the upside risks flagged in August are materialising" and that the Board would do what it considers necessary, "including increasing the cash rate target further if needed" (RBA statement, 29 September). The minutes, published on 13 October, flagged "higher underlying inflation in the September quarter than had been forecast in August" (RBA minutes).

After that the evidence kept pointing the same way:

• 21 October: Deputy Governor Andrew Hauser said "the inflation outlook looks materially worse than we projected in the August report", and that "an increasing share of businesses" think "maybe three to three and a half per cent is the new normal" (RBA transcript). On the ASX RBA Rate Tracker, the chance of a November rise went from 18% on 16 October to 51% at the 21 October close.
• 28 October, 11:30am: the ABS reported headline inflation of 4.3% over the year to September, up from 4.0% in August. The quarterly trimmed mean, the RBA's preferred measure of underlying inflation, rose 1.0% in the quarter and 3.7% over the year (ABS CPI, September 2026). That quarterly series uses the ABS's pre-October 2025 methods; the newer monthly trimmed mean, a separate series, was 3.6% over the year. The two figures measure different periods on different bases and don't conflict. That matched economists' expectations but was above the RBA's 0.8% forecast for the quarter, so the surprise was relative to the RBA's own path (AAP, reported by InDaily, 29 October).
• 28 October: Governor Michele Bullock told Senate Estimates that "some of the international and domestic upside risks to inflation have materialised or are materialising. Inflation will therefore likely be higher than was our base case in August" (RBA, opening statement). Markets closed that day at 82%.

Fuel drove much of the headline jump (ABS), but the trimmed mean strips out the largest price moves, so a 1.0% quarterly reading shows broad pressure. Our CPI September 2026 analysis breaks down what matters for landlords.

The case for a hold

A hold isn't impossible. At the 29 October close the ASX tracker implied about a 20% chance of one. The arguments for one:

• Unemployment is rising. The seasonally adjusted rate rose 0.1 percentage point in September to 4.7%, employment fell by 39,300, and the trend rate held at 4.6% (ABS Labour Force, September 2026). The seasonally adjusted rate has risen from 4.4% in June and already matches the RBA's August forecast for the end of 2027 (4.7%); it expected 4.5% by December 2026 (RBA SMP, August). The RBA's September statement described the labour market as having "eased broadly as expected".
• Housing is already correcting. The minutes said "housing prices had declined by more than expected" and "new housing loan commitments had fallen sharply, led by lending to investors." Hauser described "quite a major correction."
• Much of the headline jump is supply-driven. Petrol rose 9.4% in September alone, and the end of Commonwealth electricity rebates lifted the annual rate (ABS). A cash-rate rise addresses neither directly.

Is 4.85% the peak?

1. The RBA's new forecasts

In August, the RBA forecast the trimmed mean at 3.3% by December 2026, 3.0% by June 2027 and 2.6% by December 2027, on a technical cash-rate assumption of about 4.4% at the end of 2026 and 4.5% by mid-2027 (RBA Statement on Monetary Policy, August 2026, Table 3.1). The September quarter came in at 3.7% over the year, so the path to 3.3% by December looks harder than forecast.

What to read on Tuesday:

Source: our analysis of how forecast outcomes map to policy signals; RBA August 2026 forecasts as above.

2. The labour market

NAB chief economist Sally Auld said: "maybe getting to five per cent is not enough on unemployment. We might have to get to five and a half" (AAP, reported by InDaily, 29 October). Bullock told Senate Estimates that "despite the unemployment rate recently rising a little more than we had expected, the labour market seems a little tighter than we had previously judged" (RBA, 28 October). October's Labour Force figures (19 November) arrive before the RBA's December meeting.

3. Inflation expectations

Hauser's comment about firms treating 3–3.5% as "the new normal" is the warning to watch. If more firms set prices on that assumption, the RBA has a reason to keep going even as unemployment rises.

What this means for cuts. CBA has "rate cuts pencilled in for August and November 2027 if enough progress has been made on inflation", while cautioning that "a large degree of uncertainty remains on timing" (CommBank, 28 October). NAB gave no cut date, and Westpac's focus is a February rise. ASX implied yields on 29 October peaked near 4.94% in April–May 2027, so markets weren't pricing a full cut within 12 months (ASX). CBA's August 2027 call would come nine months after a November peak, faster than the last two cycles:

Source: RBA cash rate history, effective dates. In 2007 the decision was announced the day after the Cup Day meeting. Three cycles don't make a rule, and 2007 shows a November rise isn't always the last.

What would a 4.85% cash rate cost property investors?

These are our calculations, not lender quotes, and they're illustrative. How the model works: we start from the RBA's published average rates for outstanding investor loans in August 2026 (interest-only 6.57%, principal and interest 6.38%, RBA Table F6), add the 0.25-point September rise that the major banks passed on from 9 October, and assume every further rise is passed on in full, on a 30-year remaining term.

Monthly repayments

Source: our model. Starting rates are the RBA's August 2026 averages for outstanding investor interest-only loans (6.57%) and outstanding investor principal-and-interest loans (6.38%) (RBA Table F6, published 8 October 2026), plus the 0.25-point pass-through from 9 October. Interest-only change = loan × rate change ÷ 12; P&I uses the standard amortisation formula over 360 months. Illustrative; assumes full lender pass-through.

The interest-only increase doesn't depend on the starting rate: $750,000 × 0.25% ÷ 12 = $156.25. The +50bp column is the "Tuesday plus February" path that Westpac now describes as a heightened risk.

What 2026 has cost in total

Source: our model, interest-only, full pass-through of each rise since the cash rate stood at 3.60% at the start of 2026 (RBA cash rate history). Monthly figures.

On a $750,000 interest-only loan, $781 a month is $9,375 a year in extra interest before tax.

After-tax cost, and when the negative gearing change applies

For a negatively geared investor, extra interest is deductible, so the net cost is lower.

Source: our model, 2026–27 marginal rates, excluding the 2% Medicare levy. Assumes the rental loss offsets salary income.

The negative gearing change. Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, rental losses on established dwellings are quarantined from the 2027–28 income year unless the ownership interest was last acquired before 7:30pm (ACT legal time) on 12 May 2026. From then, those losses can't be deducted against salary or wages. So:

• Until 30 June 2027, the after-tax figures above apply to negatively geared investors generally.
• From 1 July 2027, if an affected established dwelling runs at a net loss, the owner carries the full pre-tax increase from their own cash flow. The loss is carried forward and can offset income from quarantined dwellings, net income from non-quarantined residential property and residential capital gains.
• Grandfathering follows the contract date, not settlement. For a dwelling bought under a contract, section 26-155(3) treats the ownership interest as acquired when the contract was entered into. A binding contract signed before 7:30pm on 12 May 2026 can qualify even if settlement came later, which matters for off-the-plan and delayed-settlement purchases.
• New dwellings: enacted exemption, definition still pending. The Act exempts a "new residential dwelling" but leaves the requirements to be set by the Minister in a legislative instrument, and we couldn't find one made as at 30 October. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 (introduced 14 October; passed the House 29 October; Senate Economics Legislation Committee report due 13 November) would instead write a definition into the Act, tied to when an occupancy certificate is first issued, with added exemptions such as build-to-rent. Until then, don't assume every new build qualifies; check with your tax adviser.
• Some owners are outside the rules entirely: complying superannuation entities (including SMSFs) and widely held unit trusts (section 26-155(4)). SMSFs still carry rate rises on existing borrowing: residential LRBAs entered into before the 10 August 2026 ban continue and can be refinanced, but new ones can't be taken out (LRBA checklist).

Higher rates and the July 2027 rules work on the same properties. An established dwelling bought after 12 May 2026 at today's rates faces the full pre-tax cost of every rise from 2027–28. Our negative gearing transition plan covers quarantining in detail, and the CGT countdown guide covers the separate capital gains change.

Borrowing capacity (illustrative)

Source: our model. Assumes the monthly surplus available for repayments stays at the level that supports $750,000 at 9.65% (about $6,389), assessed as a 30-year P&I loan. The starting rate is the RBA's August 2026 average for new investor variable loans (6.4%, Table F6) plus the 9 October pass-through. Illustrative, not an estimate for any borrower.

Over the year the effect compounds. If the same borrower had been assessed in January, when the cash rate was 3.60%, at about 8.65% (assuming the same gap between new investor rates and the cash rate), the same surplus would have supported about $819,500. After a rise on Tuesday it supports about $734,200, roughly 10% less, on our model.

APRA expects lenders to assess new loans at a rate at least 3.0 percentage points above the loan rate. Lenders also apply their own floor rates, living-expense assumptions and rental-income discounts, so results differ between lenders. Your deposit or equity sets the loan-to-value ratio, which affects lenders' mortgage insurance and pricing. APRA's debt-to-income limit, in force since 1 February 2026, applies separately to each lender's new investor loans and its new owner-occupier loans: up to 20% of each can be at a debt-to-income ratio of six or more (APRA, 27 November 2025). It is a portfolio limit on each lender, not a ban on any individual borrower getting a loan at six times income, though a lender close to its limit may ration those loans. Our borrowing capacity guide and calculator show how lenders differ.

Does rent still cover the interest at 4.85%?

Interest cover ignores other costs (rates, insurance, maintenance, management, vacancy), so a property that passes usually still needs cash from the owner, and one that fails needs more.

Source: gross rental yields for all dwellings from the Cotality Home Value Index, October 2026 release (index results as at 30 September 2026). Yield needed = interest rate × 0.8 (interest on an 80% loan as a share of the property's value): our calculation from RBA F6 rates.

City averages hide a wide range. Our Top 10 Suburbs October 2026 edition ran the same test suburb by suburb: at 7% and 80% LVR, asking rent covered interest for 7 of 10 listed unit suburbs and 4 of 10 listed house suburbs on July trailing medians. Those suburbs were selected for high yields and low vacancy, so they flatter the typical holding.

Rents are rising, though more slowly. SQM Research recorded national vacancy at 1.4% in September with 42,290 vacancies, up 17% on a year earlier, and advertised rents up 7.6% over the year, with unit rents falling in seven of eight capitals for the month (our SQM September analysis). Cotality's national gross yield has risen to 3.85%, its highest since August 2019, because rents kept rising (5.5% over the year) while values fell.

What does a fifth hike mean for property prices?

Where prices stand. Cotality's Home Value Index fell 1.1% in September, the sixth monthly fall, leaving national values 5.2% below the March peak. Values fell over three months in 97% of capital-city suburbs, and Brisbane (−1.5%) recorded the sharpest monthly fall (Cotality HVI, October 2026 release). Domain's September-quarter report found house prices down in every capital at once (our Domain September-quarter analysis). Cotality's October index is due on Monday 2 November, the day before the decision. Our Home Value Index tracker will carry it the same day.

What forecasters expect. In our house price forecast 2026–2027 roundup, forecasts ranged up to 10–15% peak to trough (Cotality's Tim Lawless, to the ABC on 1 October), with AMP's Shane Oliver describing a stress case near 20%. Those calls predate a fifth rise.

The RBA's own reading. The September minutes said "housing prices had declined by more than expected" and noted that "very few borrowers were in negative equity" and that "this would likely remain the case even in a scenario where housing prices fell by 20 per cent." The October Financial Stability Review estimated that less than 1% of borrowers are currently in negative equity, and that around 5% of mortgages would be in negative equity under a uniform 20% fall in housing prices, two different measures (our FSR analysis).

Should you fix, sell or hold before the rise?

Fixing

Fixed rates price the market's expected path for the cash rate, which is why they usually move before the RBA does. If the market is right about a November rise and a pause, a fix today costs about what staying variable would. Fixing pays off if rates rise further than priced, as in Westpac's February risk, and costs extra if cuts come sooner than expected.

• Suits: investors who couldn't absorb another 25–50 basis points without selling, or whose rent only just covers interest.
• Doesn't suit: investors planning to sell or refinance within the fixed term (break costs), or who want an offset account (often restricted on fixed loans).
• Middle path: a split loan fixes part of the balance and keeps an offset on the rest.

If you're already on a fixed rate, Tuesday's decision doesn't change your repayments while the fixed term runs. Your exposure arrives when the term expires and the loan reverts to the lender's variable rate, or when you refinance. Several months before expiry, compare the revert rate with fixed and variable offers from other lenders, and if you're thinking of leaving early, ask for a written break-cost quote first.

Our fixed vs variable investment loan guide covers break costs and split structures. If an interest-only period is ending, the move to principal and interest will usually raise repayments more than a rate rise. Our interest-only vs P&I guide works through that decision at post-hike rates.

Selling or holding

The decision turns on four questions, and Tuesday affects only the first:

1. Can you fund the shortfall? Using the interest-cover gap above plus your other costs, how many months of top-ups can your buffer carry at about 7.6%?
2. Is the property grandfathered? Established dwellings acquired before 7:30pm on 12 May 2026, including under a contract entered into before then, keep full negative gearing; those acquired after face quarantining from 1 July 2027.
3. What's the capital gain? Under new Subdivision 112-E, an Australian-resident individual who holds an investment property (or any other post-1985 CGT asset) on 30 June 2027 is treated as selling it just before 1 July 2027 and buying it back straight away; foreign and temporary residents are outside this deemed sale. The gain to that date uses market value, is deferred until you sell, and can still get the 50% discount. An apportioning method becomes an alternative to market value only if the Minister makes a determination (Treasury released an exposure draft in August). The gain from 1 July 2027 is measured from the deemed repurchase price, indexed for inflation instead of discounted, and for individuals is subject to a 30% minimum tax. Eligible new dwellings and affordable housing aren't deemed sold and keep a 50% discount on later growth. So selling before July 2027 isn't needed to keep the discount on gains to date. The CGT countdown guide explains the transition.
4. Is the loan-to-value ratio rising toward 100%? In a falling market, selling costs (typically 2–3% of the price) can turn a small equity buffer into a shortfall at settlement.

The Sell or Hold Planner runs these questions property by property, including grandfathering status and the 2027 tax treatment, and produces a PDF you can take to your accountant. Our mortgage stress guide covers hardship options under section 72 of the National Credit Code if cash flow becomes the binding constraint.

What to watch on Tuesday, and the three scenarios

1. The vote. Westpac expects some dissent, and CBA's note (as quoted by The Adviser) said a unanimous vote wasn't guaranteed. A split vote for a rise would suggest the Board is close to pausing.
2. The guidance. If "including increasing the cash rate target further if needed" stays in the statement, February stays live. Softer wording would support a pause.
3. The forecasts. The trimmed mean at end-2027, the unemployment path and the assumed market cash-rate path.
4. The press conference. The Governor's answers on February and on the labour market are likely to move fixed rates within hours.

Source: our analysis. Only the hold probability is market-implied (about 20% at the 29 October close, ASX RBA Rate Tracker); the other two columns are illustrative paths consistent with the bank calls, not assigned probabilities.

After Tuesday: dates that set the path to February

Source: RBA meeting schedule; ABS release calendar; Cotality and SQM release patterns. Dates marked ~ are expected, not confirmed.

Your checklist before and after Tuesday

Before the decision

1. Know your pass-through date. After the 29 September rise, CBA, Westpac, ANZ and NAB passed the full 0.25 points on to variable rates from 9 October, with Macquarie following later. Expect a similar lag of one to two weeks if rates rise again, and check your own lender's notice.
2. Stress-test at a higher rate. Run each property's holding costs at your current rate plus about 0.75 points (for the average outstanding investor interest-only loan, about 7.6%). The methodology box explains the margin. Our cash flow calculator runs the test in a few minutes.
3. Check your pre-approval. Expiry periods and reassessment rules differ by lender. A rise before settlement can trigger a reassessment at the new rate.
4. Get fixed and variable pricing in writing. Lenders usually reprice fixed rates ahead of the decision when a rise is widely expected, so today's fixed quotes may already include part of it.

If you already own investment property

• Ask your lender for a rate review before the rise is passed on. A broker can compare your rate with what new customers are being offered.
• Put spare cash against non-deductible home debt first. Once that's cleared, cash held in an offset account stays available if rates rise again.
• Base rent reviews on local evidence: postcode vacancy, comparable asking rents, lease-expiry timing and the quality of your current tenant.

Illustrative investor profiles

The people, incomes and loan balances below are hypothetical, built to illustrate common situations.

Profile 1: a pre-approved first investor

Situation: pre-approved for $700,000 in early October, after the September rise, looking at established units, with a settlement likely after Tuesday.

Reasoning: on our capacity model a rise trims about 2.1% from the approved amount, to about $685,000, if the lender reassesses. An established purchase now falls under the 2027 negative gearing rules, so losses from 2027–28 won't offset salary.

Strategy: buy below the limit to leave room for reassessment, and model cash flow before tax from July 2027. Use the soft market: our rule of thumb is that listings with more than six weeks on market, a price cut or a passed-in auction are worth approaching after a rate decision.

Profile 2: a stretched interest-only owner

Situation: a $650,000 interest-only loan at about 6.8%, bought in 2024 (grandfathered), rent covering about 70% of interest, interest-only period ending in 14 months.

Reasoning: a rise adds about $135 a month ($650,000 × 0.25% ÷ 12); including a rise on Tuesday, the increase since January totals about $677 a month on this loan ($650,000 × 1.25% ÷ 12). The interest-only expiry is the bigger change: moving to principal and interest on the remaining term will lift repayments more than any single rate decision.

Strategy: model the expiry now at about 7.6%, ask the lender about an interest-only extension or a rate review, and run the property through the Sell or Hold Planner before the expiry forces a decision.

Profile 3: an equity-rich portfolio owner

Situation: three grandfathered properties, $600,000 of usable equity, servicing comfortable at current rates.

Reasoning: sellers carrying their own rate increases are likely to be more negotiable. A further purchase of an established dwelling would sit under the 2027 quarantining rules. A new dwelling would keep full negative gearing only if it meets the new-dwelling requirements, which are still being legislated.

Strategy: keep a cash buffer of at least 12 months of shortfalls across the portfolio before adding debt. Negotiate on price rather than chasing yield, and check the purchase works with no deduction against salary.

Profile 4: a cash-flow investor in regional markets

Situation: two regional houses bought for yield, both at 5.5–6.0% gross, loans at 70% LVR, principal and interest.

Reasoning: at 70% LVR and about 6.88% P&I after a rise, the interest-cover bar is about 4.8% of value (6.88% × 0.7), so both properties still cover interest with margin. Principal repayments still reduce cash flow, and regional markets can be thinner and more dependent on one industry.

Strategy: hold and keep reviewing vacancy and rents in each postcode.

Profile 5: a buyer waiting on the sidelines

Situation: cash deposit saved, no property yet, watching for the bottom.

Reasoning: waiting for the peak in rates and buying at the bottom of prices rarely happen together. A peak in the cash rate is usually only clear in hindsight, and prices often stabilise before the first cut.

Strategy: decide the purchase on whether it works at about 7.6% rather than on rate timing. Pre-approval reassessment and the 2027 tax status (established vs new) matter more to the result than Tuesday's quarter point.

What would change our view, and what could go wrong?

Risks, with mitigations

• Rates rise twice more. A cash rate of 5.10% by February would add $313 a month to a $750,000 interest-only loan versus today, $156 more than Tuesday's rise alone. Mitigation: stress-test at your rate plus about 0.75 points and hold a cash buffer.
• The labour market turns faster. Rising unemployment would increase arrears and forced sales even if it brought rate cuts forward. Mitigation: landlord insurance and tenant quality; don't rely on rent growth.
• Prices fall further than forecast. Mitigation: avoid loan-to-value ratios that a further 10% fall would push past 90%.
• Rates and tax combine for recent buyers. An established dwelling bought after 12 May 2026 with a negatively geared structure faces higher rates now and quarantined losses from July 2027. Mitigation: model holding costs before tax from 2027–28.

The Bottom Line

The September CPI moved the RBA November 2026 rate decision from a close call to a likely rise. The ABS's quarterly trimmed mean rose 1.0%, above the RBA's 0.8% forecast (as reported by AAP), and all four major banks now expect the cash rate to reach 4.85% on Tuesday. On our model, that's another $156 a month on a $750,000 interest-only loan and $781 a month across the year.

For most leveraged investors, the bigger issue is the gap between rent and interest. On an 80% interest-only loan, rent covers the interest only at a gross yield near 5.7%, a level no capital except Darwin reaches. Whether 4.85% is the peak depends on Tuesday's forecasts, the labour market and the October CPI, and the banks disagree on it.

Stress-test at your rate plus about 0.75 points, read the guidance and forecasts on Tuesday, and run any property that fails the test through the Sell or Hold Planner. We'll update this page with the decision on Tuesday afternoon.