At its meeting today, the Reserve Bank's Monetary Policy Board increased the cash rate target by 25 basis points to 4.60 per cent — the highest level since late 2011, and the fourth increase this year. The decision was unanimous.
Source: Reserve Bank of Australia, Statement by the Monetary Policy Board, 29 September 2026.
Why the Board moved
In its statement, the RBA pointed to several upside risks to inflation that have materialised since its previous meeting. The conflict in the Middle East has broadened, pushing global energy prices above what the Bank had assumed in its August forecasts. Demand linked to AI infrastructure investment is driving rapid growth in global prices for technology-related goods. Domestically, the Bank noted continued pressure on capacity, with businesses reporting cost pressures and either raising prices or planning to.
As at July, headline inflation was running at an annual pace of 3.5 per cent and underlying inflation at 3.6 per cent — both above the RBA's 2–3 per cent target band. The Board said it remains focused on ensuring high inflation does not become embedded, and confirmed it is prepared to raise rates further if the data warrants it.
The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate further if needed.
Source: RBA Monetary Policy Board statement, 29 September 2026.
What it means for borrowing capacity
Every increase in the cash rate flows through to the serviceability calculations lenders use to assess how much a borrower can responsibly take on — for a home, an investment property, or a commercial acquisition. Property economists have noted that the cumulative effect of this year's four rate rises has been substantial: one Sydney agency principal estimated that a buyer who could borrow around $1.5 million in January can now borrow closer to $1.37 million on the same income, a reduction of roughly 9 per cent in borrowing power in nine months.
That compression in borrowing capacity applies whether the borrower is purchasing a home, an investment property, or funding a commercial transaction through a mainstream lender. Housing prices have already softened in most capital cities this year, and new housing lending has declined noticeably, according to the RBA's own commentary.
What it means for private and property-backed finance
As borrowing capacity tightens under mainstream lending criteria, transactions that depend on precise timing — a settlement date, a construction drawdown, an opportunity that won't wait for a full bank approval cycle — become harder to fund through the conventional channel alone. This is where property-backed private finance tends to be considered: not as a substitute for a sound transaction, but as a way to execute one on the timeframe it actually requires.
It's worth being direct about what a higher cash rate does not change. It doesn't change the fundamentals of a transaction — the asset, the purpose, the exit. A scenario that wasn't viable before this rate rise isn't made viable by finding a different type of lender. What changes is the value of certainty and speed when conventional finance timelines and serviceability buffers get tighter.
What's next
The Bureau of Statistics releases its September quarter inflation data tomorrow, which will be closely watched as an early signal for the RBA's next meeting. The Board's next scheduled decision is on 3 November 2026. Several bank and property economists expect the RBA's next move to depend heavily on that inflation print and on how the labour market tracks over the coming weeks — with a further hike still very much on the table if price pressures don't ease.
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Submit Your Scenario →This article is general in nature and does not constitute financial, credit or legal advice. It does not take into account your objectives, financial situation or needs. Figures and commentary are drawn from the Reserve Bank of Australia and third-party economic commentary current as at the date of publication (29 September 2026); rates, forecasts and market conditions change and should be independently verified. Any funding is provided for business or investment purposes only, is not regulated credit, and remains subject to Funding Door's credit assessment and approval. Please seek independent professional advice before acting.