RBA Raises Rate to 4.35%: What It Means for Your Mortgage
The RBA has raised the cash rate target by 0.25 percentage points to 4.35% at its May 2026 meeting. That takes the cash rate back above March's 4.10% setting and means variable-rate borrowers should expect fresh pressure on repayments if lenders pass the move on.
The change takes effect from 6 May 2026. In plain English, this is another reminder that mortgage buffers matter and that a sleepy home loan can get expensive fast.
What changed today
Before today's decision, the cash rate sat at 4.10%. The RBA lifted it by 25 basis points to 4.35%.
- Previous cash rate: 4.10%
- New cash rate: 4.35%
- Change: +0.25%
- Effective date: 6 May 2026
On meeting days, the cleanest source is the RBA itself. The Board statement and the cash rate table both show the move to 4.35%.
What it means for mortgage repayments
The RBA does not set your home loan rate directly, your lender does. But if your bank passes on the full 0.25% rise, here is the rough monthly impact on a 30-year principal-and-interest loan, assuming a loan rate moving from 6.20% to 6.45%.
| Loan size | Before rise | After rise | Extra per month |
|---|---|---|---|
| $500,000 | $3,062 | $3,144 | +$82 |
| $750,000 | $4,594 | $4,716 | +$122 |
| $1,000,000 | $6,125 | $6,288 | +$163 |
That might not sound catastrophic in isolation, but the pain compounds when it lands on top of already high grocery bills, insurance, childcare, and everything else that has decided to get more expensive lately.
Use the Mortgage Calculator to estimate your repayment, then check the Rate Rise Impact Calculator to see what another 0.25%, 0.5%, or 1% would do.
Who gets hit hardest
The borrowers most exposed are usually the ones with big, newer loans and not much breathing room left in the monthly budget. If you bought recently, rolled off a fixed rate, or have been meaning to refinance for six months and still have not done it, this is your nudge.
Even if your lender does not pass on the full rise immediately, the direction of travel matters. A home loan that was merely annoying at 6.2% can turn properly ugly if another hike lands later this year.
What to do next
- Check your lender's response. See whether they pass on the full 0.25% and when it starts.
- Stress-test your budget. Model another 0.25% to 0.50% rise now, before it becomes real.
- Build your offset buffer. Cash in offset works harder when rates are high.
- Review your rate. If your lender is already uncompetitive, a refinance may save more than trying to cut three subscriptions and your occasional takeaway.
The simple takeaway
The RBA has raised the cash rate to 4.35%. For many mortgage holders, that likely means higher repayments within days or weeks. If your loan is variable, do not wait for the bank email to start paying attention. Run the numbers, protect your cash flow, and make sure your current rate is not quietly robbing you.
Frequently asked questions
What is the RBA cash rate after the May 2026 meeting?
The RBA cash rate target is now 4.35%, up from 4.10% after a 25 basis point increase.
How much extra is a 0.25% rise on a $750,000 mortgage?
On a 30-year principal-and-interest loan, moving from 6.20% to 6.45% takes repayments from about $4,594 to $4,716 a month, roughly $122 extra monthly.
Will every lender pass on the full RBA rise?
No. Banks decide whether to pass on all, part, or none of the move. Variable-rate borrowers usually feel most of the change, but not always one-for-one.
What should I do first after a rate rise?
Check your new repayment, review your cash buffer, then compare your current rate with other lenders. If you are already paying a weak rate, refinancing deserves a look.
Sources
- Reserve Bank of Australia, Cash Rate Target
- Reserve Bank of Australia, Monetary Policy Decision, 5 May 2026
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