RBA lifts cash rate to 4.85%: what it means for property investors
The RBA's fifth rise of 2026 reaches variable loans from 13 November, just as rents slow and vacancy climbs. Here's what each 0.25% costs on an investment loan, and a 10-minute check for every property.
The Reserve Bank lifted the cash rate by 0.25 percentage points to 4.85% on 3 November 2026, its highest level since 2008 (Savings.com.au, 3 Nov; RBA Statement on Monetary Policy, Nov 2026). It's the fifth rise this year, after February, March, May and September, and it was a split decision: six Board members voted to raise and three to hold.
The RBA described inflation as broadly based and expects it to stay above 3% through much of 2027. Annual CPI inflation was 4.3% in the September quarter (ABS, 28 Oct).
For a $600,000 interest-only variable loan, the five rises add up to about $7,500 a year in extra interest since January, if your lender passed each one on in full.
What changes on 13 November
CommBank, Westpac, NAB, ANZ and ING have all said they'll pass on the full 0.25% to variable home loans from Friday 13 November. Macquarie follows on 19 November (Australian Broker, 4 Nov; Canstar, 4 Nov).
Check your lender's letter for the new rate and the date your repayment changes. It's often the first repayment after the effective date.
Investor and interest-only rates sit above the headline rates. The big four's lowest advertised variable rates (owner-occupier, principal and interest) move to between 6.49% and 6.75%. Expect your investment loan to be higher.
Ask about a better rate. Canstar expects more than 40 lenders to offer owner-occupier variable rates below 6.5% after the rise. Some lenders keep their sharpest rates for new customers, so it's worth asking yours to match.
Rates are only half the story this month
The decision landed a day after Cotality's Home Value Index showed how much else has shifted for investors (Cotality, 2 Nov):
Values: down 1.2% nationally in October, the seventh monthly fall in a row, and 6.7% below the March peak. Combined capitals are down 8.1% from that peak, which Cotality says is the fastest pace in about 40 years.
Rents: up 0.9% over three months, seasonally adjusted, the smallest rise since January 2025.
Vacancy: 2.3% nationally, the highest since January 2022.
Yields: 3.77% gross across the combined capitals, the highest since May 2015.
Selling: median time on market is 39 days and vendor discounting is 4.7%.
Other holding costs are moving too. Electricity prices rose 12.8% over the year to September, while CPI rents rose 3.6% (ABS, 28 Oct).
Higher yields sound like good news, but they partly reflect falling values. Cotality's Tim Lawless points out that yields are still well short of what a neutral or positive cash flow needs, with investor mortgage rates now close to 7%.
What each 0.25% costs on an investment loan
| Loan | Interest-only, per year | Interest-only, per month | Principal and interest, per month |
|---|---|---|---|
| $400,000 | $1,000 | $83 | $67 |
| $600,000 | $1,500 | $125 | $101 |
| $800,000 | $2,000 | $167 | $135 |
These figures assume a variable rate and a lender that passes on the full 0.25%. The principal-and-interest column uses a new 30-year loan moving from 7.00% to 7.25%. Your own numbers will differ. On a fixed rate, the change arrives when your term ends.
The gap between rent and interest
Here's an illustration, not a typical portfolio. Take an $800,000 capital city property at the 3.77% gross yield, with a $640,000 interest-only loan:
Rent: about $30,160 a year, or $580 a week.
Interest at 7.00%: $44,800, leaving a gap of $14,640.
Interest at 7.25%: $46,400, leaving a gap of $16,240.
That's before rates, insurance, strata, management and maintenance. Two vacant weeks would remove about another $1,160 of rent.
Why the 2027 tax rules raise the stakes
For established properties bought after 7:30pm AEST on 12 May 2026, net rental losses from 1 July 2027 can generally be used only against residential property income, not salary. Unused losses carry forward (ATO). So a wider gap on one of those properties isn't softened by a lower tax bill that year. Properties held before the cut-off and new builds are treated differently, so it pays to know which group each property sits in. Our September rate rise guide covers those groups and the records to keep.
A 10-minute check for every property
Update each variable loan when your lender confirms its rate.
List fixed rates ending in the next 12 months, and estimate the jump to today's variable rates.
Test your cash flow at +0.25%, +0.50% and +1.00%, with rent held flat and two or three vacant weeks.
Work out your buffer: how many months of shortfall could your cash, offset and savings balances cover? Our landlord buffer guide explains how to size one.
Diarise the next decision: 8 December (RBA calendar).
How PropKeeper helps
The Rates Stress Calculator runs that check on your real loans, rents and bills, for one property or your whole portfolio:
Test +0.25%, +0.50%, +1.00% or your own rate rise.
Change the rent and add vacant weeks.
See monthly and annual net cash flow, and the repayment change on each loan.
See how many months of shortfall your cash can cover, and which fixed rates end in the next 12 months.
It's included on every plan. Start your free 30-day trial, with no card needed, and see what the next move would do to each property. See also features and pricing.
This article is general information only, not financial or tax advice. Your situation may differ, so speak to a registered tax agent or licensed financial adviser before acting.
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