RBA Rate Hike to 4.85% Tests Mortgage Holders
The Reserve Bank's expected Tuesday increase would lift the cash rate to its highest level since late 2008.
Updated on Nov. 2, 2026 in Residential
Live Poll
Are interest rates making it harder for you to afford your mortgage?
The Reserve Bank of Australia is expected to raise its cash rate to 4.85 per cent following its Tuesday meeting, the fifth rate hike this year. The move comes as average new mortgages of $731,000 carry monthly repayments of $4690 at a 6.65 per cent variable rate.
Why it matters
Shadow Treasurer Tim Wilson argued that millennials face tougher mortgage conditions than boomers did at 17 per cent rates in 1990. The rate rises have coincided with falling house prices across several capital cities.
The cash rate of 4.85 per cent is its highest level since late 2008, against 17 per cent in February 1990 when the average earner paid 42 per cent of salary on repayments. Whether further rate rises will follow the Tuesday decision is not yet known.
The players
Reserve Bank of Australia
Australia's central bank, which sets the cash rate and has raised it five times this year to combat inflation.
Tim Wilson
Shadow Treasurer and Liberal Party frontbencher who argued that millennials face harder mortgage conditions than boomers did in 1990.
The details
Melbourne's median house price stands at $906,067 after a 9 per cent fall since the start of 2026, while Brisbane values have dropped 6.2 per cent since July to $1.112 million. Perth's median has fallen 5.6 per cent since July to $982,146.
Timeline
February 1990: cash rate at 17 per cent.
February, March, May and September 2026: rate hikes contributed to falling house prices.
Start of 2026: Melbourne house prices began their 9 per cent decline.
Start of July 2026: Brisbane and Perth house values began falling.
Tuesday, 3 November 2026: Reserve Bank meeting expected to lift the cash rate.
Historical Context
Today's 4.85 per cent cash rate is well below the 17 per cent seen in February 1990, when borrowers under the Hawke and Keating governments faced far higher repayment burdens. Federal government spending now makes up 26.9 per cent of GDP, compared with 22.9 per cent in 1989-90.
A cash rate of 4.85 per cent would raise monthly repayments on an average $731,000 mortgage, which already consume 52 per cent of pre-tax salary for the average earner in the example. Households with variable-rate loans would feel the change through higher monthly payments.
The takeaway
Borrowers with variable-rate loans should review their repayment buffers before further rate changes take effect. Monitoring the Reserve Bank's decisions helps households plan their budgets.
What happens next
The Reserve Bank's decision is due on Tuesday, 3 November 2026, when the cash rate is expected to be announced.
Further reading
Track the latest Residential market trends affecting Australian homeowners and buyers.
Source note: This article includes information reported by The Nightly.
Live Poll
Are interest rates making it harder for you to afford your mortgage?
