Rates hit 4.85%: what the fifth rise of 2026 means for business borrowers, investors and refinance plans

The Reserve Bank has raised the cash rate for the fifth time this year, and it wasn't a unanimous decision. This article explains what the RBA decided, why, and what it means for business borrowers, investors and anyone planning a refinance.

What the RBA decided

On Melbourne Cup Day, the RBA's Monetary Policy Board lifted the cash rate target by 0.25 percentage points to 4.85%, up from 4.60%. It is the highest cash rate since late 2008, and the fifth increase of 2026.

The board was split. Six members voted to raise the rate, while three voted to hold at 4.60%.

Source: Reserve Bank of Australia, 3 November 2026.

Why the RBA moved

The board said inflation is now forecast to remain high throughout much of 2027 and is not expected to fall below 3% until late 2027, which is around three quarters later than previously forecast. It said this presents upside risks to inflation expectations.

That follows last week's inflation data, which showed annual CPI rising to 4.3%. See Inflation hits 4.3%: why rates may stay high well into 2027.

Reporting on the decision noted that the RBA has left the door open to further increases. The three dissenting votes show the board is divided, but a split decision isn't a promise that rates have peaked.

What it means for business borrowers

• Variable-rate debt costs more. An illustrative example: on a $2 million variable-rate facility, a 0.25% increase adds about $5,000 a year in interest. Across five rises this year, totalling 1.25 percentage points, the same facility costs about $25,000 a year more than at the start of the year. The example is illustrative only.
• Margins are already thin. NAB's business confidence reading is in the bottom 5% on record. See Business confidence is in the bottom 5% on record.
• Plan for no relief soon. With inflation forecast to stay elevated through 2027, businesses shouldn't build plans around early rate cuts.

What it means for property investors

• Serviceability is tighter. Higher rates reduce borrowing capacity and the surplus rents leave after interest.
• Cash flow comes first. With rents flattening, investments need to stand on their own cash flow. See Rents have hit a ceiling.
• Values are under pressure. Higher rates feed into falling prices, which affects LVRs at refinance. See Home values fall at the fastest pace in 40 years.

What it means for refinance plans

Borrowers with loans coming to the end of a fixed term, an interest-only period or a lender's review should start planning early. A refinance now typically means a higher rate, a tougher serviceability assessment and, in a falling market, a more conservative valuation.

Borrowers who can't refinance with a bank in time may need an alternative, such as short-term or bridging finance, while they sort out a longer-term solution. These products usually cost more than bank lending, so they suit a defined period with a clear exit. See Bridging finance explained.

Practical steps

• Check when your fixed rates, interest-only periods and facility reviews end.
• Stress-test your repayments against another 0.25% to 0.50%.
• Update valuations and financials before you need them.
• Talk to your broker early. Options are wider when there's time.

The Funding Door view

The RBA's message is that high rates will last longer than expected. Borrowers who plan for that, with realistic cash flow, a buffer and an early refinance conversation, are far better placed than those who wait.