Australia's key interest rate is expected to reach its highest level since 2011, with the Reserve Bank board poised to hike the cash rate from 4.35% to 4.6% on Tuesday. This would mark the fourth increase in 2026, potentially pushing typical home loan interest rates to 6.5%.
The anticipated rate rise is expected to add more than $100 to typical monthly mortgage repayments. For an average-sized new mortgage of $731,000 at a rate of 6.2%, an increase could add approximately $119 to monthly repayments, bringing the total rise since January to nearly $480.
House prices are forecast to fall further following a fourth rate increase. Cotality data indicates that home prices across Australia have already dropped more than 4% from their peak earlier this year. Westpac has predicted falls of 10% in Sydney and 8% in Melbourne.
Shrinking borrowing capacities, partly due to three rate rises and government investor tax reforms, have led to a slump in home loan inquiries. Equifax data shows inquiries fell from nearly 15,000 a week at the start of 2026 to just over 12,000 in August and September.