Who pays for the rises

On Tuesday 29 September 2026 the Reserve Bank’s Monetary Policy Board raised the cash rate target by 25 basis points to 4.60 per cent, unanimously, the fourth rise of 2026 ¹. The new rate takes effect on 30 September ². The four rises total 100 basis points from 3.60 per cent, and 4.60 per cent is above the 2023 peak of 4.35 per cent and the highest since late 2011 ².

Who pays for that? This article follows the cost on the record: the repayment on a mortgage, the rise in living costs, and the job cost. It rests on the Reserve Bank’s own research, forecasts and words, the Australian Bureau of Statistics (ABS) indexes and labour force data, a few attributed private sources, and labelled arithmetic by THE RORT. Where THE RORT has done the sum, the method is shown.

The Bank’s best defence gets its own section at the end, in its own words. The charge is narrow. The rise is a cash cost to borrowers and a living cost to the households the ABS measures; the Governor has said the Bank expects that a period of subdued growth in the economy will be required to bring inflation down; and the Bank’s own forecasts have unemployment rising.

01The repayment: four rises, one mortgage

Canstar’s projection for the 29 September rise assumes an owner-occupier making principal and interest repayments with 25 years remaining on their loan term in February 2026, at the average variable rate, with banks passing the rise on from the following month. On a $600,000 loan the September rise adds $91 a month, and the four 2026 rises together add $364 a month. On $500,000 the four add $303 a month; on $750,000, $454; on $1,000,000, $606 ³.

Two things about those figures. They are Canstar’s projection, not a bank’s announcement: when the desk checked (below), the big four had not announced any change. And they describe a modelled owner-occupier, not any particular household.

In the Reserve Bank’s indicator lending rates table (F5), every advertised bank variable housing rate rose by exactly 0.75 points in the months of the three rises to May (25 basis points each in February, March and May): the standard owner-occupier rate went from 8.02 per cent in December 2025 to 8.77 per cent in August 2026 ⁴. The average rate actually charged on outstanding owner-occupier variable loans, which the Bank publishes separately (table F6), rose 0.7 points, from 5.5 per cent to 6.2 per cent, between December 2025 and July 2026 ⁵. Table F6 is published to one decimal place.

Why the cash rate reaches Australian repayments quickly is a matter of the Reserve Bank’s own record. It says, on the Bank’s graph of major banks’ housing credit, the share of outstanding housing loans with fixed rates fell to “a historical low of less than 5 per cent in 2025”, and that a lower fixed-rate share “increases the sensitivity of household cash flows to changes in interest rates, increasing the strength of monetary policy transmission through that channel” ⁶. Its February 2026 Statement on Monetary Policy said that “less than 5 per cent of new and outstanding mortgages are on fixed-rate terms”, and its May 2026 statement: “Cash rate increases can take up to three months to flow through to minimum required variable-rate mortgage payments.” ⁷

Abroad the structure differs. The Bank’s Christopher Kent said in November 2024 that fixed rates averaged around 20 per cent of Australian mortgages over two decades, mostly fixed for two years or less. Australia and Norway have over 80 per cent of mortgages at variable rates; in the United States over 80 per cent is long-term fixed. Australian fixed periods are about two years, against five in the United Kingdom and Canada and 30 in the United States (data from 2023 and 2024) ⁸. Where rates are fixed for longer, the hit is delayed, not avoided: the Bank of England’s July 2026 Financial Stability Report projects a little over 5 million UK households will see their repayments increase by the end of 2028, and says nearly 750,000 households paying less than 3 per cent will roll off fixes in 2026, for an average increase of £170 a month ⁹.

Between 4.44 pm and 4.46 pm AEST on 29 September the desk re-checked the big four banks’ pages. None had announced a change to variable home loan, savings or term deposit rates. CBA’s savings page said “we’re currently reviewing the interest rates for savings products”; Westpac said “our interest rates are currently under review”; ANZ said it was “reviewing its home loan and residential investment loan interest rates”; NAB’s home loan page still showed 3 February 2026 ¹⁰. Macquarie, which had announced, says on its own page: “Macquarie is increasing its variable home loan reference rates by 0.25% per annum, effective 15 October 2026” ¹¹.

02One rise, two incomes

The question this section answers is whether a rate rise hurts someone on $1 million as it hurts someone on $1,000 a week or less. A rise is a cash cost to a borrower, so the fair test is to set the same cost against two incomes.

Take one hypothetical loan: $600,000, owner-occupier, principal and interest, 25 years remaining. Canstar projects that the four 2026 rises together add about $364 a month to repayments on it ³. That is $4,368 a year.

THE RORT’s calculation, with the method shown: $364 x 12 = $4,368. $4,368 / $52,000 (a hypothetical earner on $1,000 a week, gross) = 8.4 per cent. $4,368 / $987,132 (the Governor’s 2024/25 base salary) = 0.44 per cent ¹².

Read that with its conditions. It is the same hypothetical loan applied to two incomes, both gross, before tax. It describes no real person’s loans or finances. A $600,000 loan on $52,000 a year is illustrative, not a claim that a lender would approve it. And a percentage of gross income is not a measure of hardship on its own: it does not show tax, savings, buffers or any other cost.

The pay figures are the Reserve Bank’s own. The Governor’s total remuneration in 2024/25 was $1,195,275: base salary $987,132, other benefits $31,457, superannuation $132,457 and long service leave $44,229 ¹². THE RORT sets base salary, not the total package, against a wage; the ABS earnings series exclude employer superannuation ¹³.

For scale, the ABS puts median employee earnings in main job at $1,425 a week in August 2025 (released 12 December 2025). In May 2026, full-time adult average weekly ordinary time earnings were $2,083.70 (seasonally adjusted, up 3.7 per cent) and all-employee average weekly total earnings were $1,579.20 ¹³. The $1,000-a-week figure used above is a round hypothetical, below each of those.

The other side on pay. No bonus was paid to the Governor or to any other key management person in 2024/25: the annual report’s Bonuses column shows a dash for each ¹². And the Remuneration Tribunal decided on no adjustment for public offices in its jurisdiction from 1 July 2026, saying that the approach “will result in a reduction in real remuneration” ¹⁴. Whether that freeze applies to the Governor’s package, which is set by the Governance Board inside a Tribunal band, was not confirmed.

03The rise as a living cost

The ABS’s Selected Living Cost Indexes for the June quarter 2026, released on 5 August, list the policy instrument itself among the costs households carry.

Mortgage interest charges rose due to banks passing on the RBA’s cash rate increases in February, March and May to both fixed and variable rate home loans.

Employee households recorded the largest rise in living costs that quarter, 1.5 per cent, and the ABS attributes it largely to an 8.2 per cent rise in mortgage interest charges. It adds: “The remaining impact will be seen in the September 2026 quarter.” ¹⁵

The quarter and the year differ. Over the 12 months to the June 2026 quarter the indexes rose between 3.7 and 4.7 per cent: age pensioners’ costs rose most (4.7 per cent, with housing up 10.8 per cent), then pensioners and beneficiaries (4.6 per cent), self-funded retirees (3.8 per cent) and employees (3.7 per cent) ¹⁵. Employee households were hit hardest in the June quarter, not over the year.

The Governor has made a different point about the same experience. On 11 August she said people with mortgages “see the cost of their mortgages going up, and therefore their cost of living goes up. And they’re conflating”, and: “they’re saying cost of living going up is inflation. They’re actually not the same thing. But I get why people think th[at]” ¹⁶. What the ABS records is the thing she describes: banks passing the Bank’s rises on to home loans, and the rise showing up in households’ living costs ¹⁵.

04Who has a mortgage, and who gains

The latest official tenure figures are from 2019-20: 37 per cent of households owned with a mortgage, 29 per cent owned outright and 31 per cent rented. Owners with a mortgage spent 16 per cent of income on housing costs, renters 20 per cent ¹⁷. The 2021 Census counted 35 per cent of occupied private dwellings owned with a mortgage, 31 per cent owned outright and 30.6 per cent rented ¹⁸.

There is nothing newer from the ABS’s housing-cost survey. It cancelled the 2020-21 and 2021-22 surveys because of COVID, and will not release the 2023-24 results because of data collection issues; results from the 2025-26 survey are expected from mid-2027 ¹⁹. The desk found no published figure for the share of households with a mortgage in 2026. A mortgage share is not a household share, and a headline about borrowers is not a headline about everyone.

The Reserve Bank estimates that a 100 basis point rise lowers total household disposable income by around 0.2 per cent, an estimate for the September quarter 2024, before the 2026 rises. It finds the reduction in cash flows is highest on average for households aged 30 to 54 ²⁰.

By income the picture is mixed, and the Bank says so. “The cash flows of higher income households tend to fall in aggregate when the cash rate increases”, because many of them have mortgages, while lower-income households gain in aggregate, because more of them are renters and outright owners. But inside the group with a mortgage the order reverses: “Looking just at households with housing debt, the impact of interest rate increases on disposable income is greater for lower income households”, who also have thinner buffers ²⁰.

Outright owners, about a third of households, gain income when rates rise. “For the median outright homeowner household, the size of this increase is only around one-third of the decrease in cash flows experienced by the median mortgagor household”: a comparison of medians, not of totals. Many older households own outright, and the Bank says this group “typically benefit from higher interest rates” ²⁰.

Savers earn more too. The Bank’s Assistant Governor Christopher Kent said in October 2023: “When interest rates go up, households pay more on their debt and earn more on their savings” ²¹. The average rate households were paid on all outstanding deposits rose from 2.8 per cent to 3.5 per cent between December 2025 and July 2026, and on at-call household balances from 2.5 per cent to 3.2 per cent ²². Those are averages across products.

05Renters: little direct effect, twice the stress

The Reserve Bank’s research says renters “tend to have much lower levels of both assets and debt, meaning changes in interest rates have very little direct effect on their cash flows” ²⁰. That is half the finding. Its Financial Stability Review says lower-income households, many of them renters, are more likely to be in financial stress: in 2024, “the share of renters experiencing at least one incident of financial stress was around two times that of owner-occupiers” ²³. The two halves belong together.

The Governor made the same point on 3 February 2026: “it’s not just people with mortgages, renters are often struggling as well, inflation is what’s caused them lots of trouble. It’s the price level. The price level has gone up 20 to 25 per cent over the last few years” ²⁴. The 20 to 25 per cent is the Governor’s figure, not an ABS figure.

Rents rose 3.6 per cent over the 12 months to July 2026, the same rate as to June and May, and close to headline consumer price inflation of 3.5 per cent ²⁵.

Whether landlords pass rate rises on to renters is a question the Bank has studied. Its research found that, on average, “for every dollar increase in their mortgage interest costs, investors increase their rents by one cent”, and at most three cents in rising-rate periods, and concluded: “Overall, we find limited evidence that investors pass-through changes in their interest costs to their rents” ²⁶. Two limits apply. The estimates use tax data for 2006-07 to 2018-19, and the Bank says pass-through may be higher when vacancies are very low, “as is currently the case” ²⁶.

06Jobs: the forecast and the count

The Reserve Bank’s August 2026 Statement on Monetary Policy forecasts unemployment rising from 4.4 per cent in June 2026 to 4.8 per cent by end-2028, and GDP growth of 1.4 per cent over 2026: “Subdued GDP growth will weigh on labour demand, with the unemployment rate forecast to increase gradually to 4.8 per cent by end-2028” ²⁷.

The Bank publishes a rate, not a headcount. THE RORT’s calculation: at the August 2026 labour force of about 15.56 million people, each 0.1 point of unemployment is about 15,600 people, so a rise from 4.4 to 4.8 per cent is roughly 62,000 more unemployed people ²⁷²⁸. From today’s actual count the gap to 4.8 per cent is smaller: 15,559,500 x 4.8 per cent = 746,856, less the 722,900 unemployed in August, is about 24,000 more ²⁸. Both figures are THE RORT’s arithmetic on the ABS count and the Bank’s forecast, not Bank statements. The cost in the forecast is more unemployed people as the labour force grows, not fewer jobs: employment is still growing.

The Bank does not split that forecast rise by cause, and it has published no estimate of what the 2026 rises themselves do to unemployment; its forecasts rely on restrictive conditions keeping growth below potential so that the labour market eases ²⁷.

The August count, from the ABS Labour Force survey (seasonally adjusted): unemployment 4.6 per cent, up from 4.5 per cent in July. Over the year unemployed people rose by 80,000 (12.4 per cent) to 722,900, while employment rose by 238,100 (1.6 per cent) to 14,836,600. Both halves are true together ²⁸. The ABS flags a survey method change and recommends using trend estimates (trend unemployment is also 4.6 per cent); it calls the August data “fit-for-purpose” ²⁸.

In trend terms unemployment has not fallen at any point in 2026: it was 4.3 per cent in January and 4.6 per cent in August, the highest in the release’s 12-month table ²⁸. Underemployment was 6.2 per cent in August and has exceeded the unemployment rate in every month of 2026; underutilisation was 10.8 per cent in July and August, up from 10.0 per cent in January (seasonally adjusted) ²⁸. August’s job growth was all part-time: full-time employment fell by 6,300 and part-time employment rose by 45,800. That is one month, not a trend ²⁸.

Unemployment is already at the level the Bank’s August forecast had for mid-2027: 4.6 per cent, against 4.5 per cent forecast for December 2026 ²⁷²⁸. That is not the same as saying the forecast has been missed. The forecast is a quarterly average, and the September quarter is incomplete: the July and August average is 4.55 per cent (THE RORT’s calculation).

What the Governor has said. On 11 August a Bloomberg journalist put it to her that “you say that we need higher unemployment”; those words are the journalist’s. Explaining what supply shocks do to the trade-off, she said: “Turned around, it means that for every inflation rate, we have to have a higher unemployment rate”. She said a slowing and a rise in unemployment are not a reason to reverse course: “Actually, we need that. We need growth to slow”. For balance, she said “I don’t like people losing their jobs generally. It’s stressful for them”, adding that employment “is still growing” ¹⁶. On the same day: “We expect that a period of subdued growth in the economy will be required to bring inflation down sustainably” ¹⁶.

I think between 4.5 and 5 will probably take enough heat out of the labor market that it’ll ease pressure on inflation.

That is the Governor’s answer to an audience question on the tolerable level of unemployment at the CEDA event on 22 September, in the Bank’s own transcript. The passage begins: “There’s no particular level at which I think we can get to.” In the same answer she said: “So it’s not that I can say I will only tolerate an unemployment rate of, say, 4.5 per cent at the moment. At the moment, we think that’s a bit tight.” And, for balance, she said that “having a job is really important” and that “high unemployment is not great” ²⁹.

On the day of the rise, ACOSS chief executive Cassandra Goldie said: “Raising interest rates is creating unemployment by design, putting thousands of people out of work to slow the economy.” That is a reaction, not a statement of fact about unemployment; the ABC live blog framed it as a response to the Governor’s comments, and the Governor’s own words are above ³⁰.

07The young first

Youth unemployment (ages 15 to 24) rose by 0.4 points to 10.8 per cent in August, more than double the national rate of 4.6 per cent ²⁸. Over the year to August it rose by 1.1 points (from 9.7 to 10.8 per cent), against 0.4 points nationally: about 2.75 times as much. In trend terms the figures are 0.7 against 0.3, about 2.3 times. The ratios are THE RORT’s calculation from the ABS series ²⁸.

It is the pattern Reserve Bank research predicted in 2018: the youth rate “tends to move twice as much”, possibly reflecting a “last in, first out” practice, with young workers “disproportionately concentrated in industries where the nature of work is quite cyclical, such as retail trade and food & accommodation” ³¹.

More than one in four young people in the labour force is now unemployed or wants more hours. Youth underutilisation was 26.3 per cent in August 2026, against 23.4 per cent a year earlier and 26.4 per cent in July: up 2.9 points over the year, against 0.9 points nationally, about 3.2 times as much (THE RORT’s calculation). Youth underemployment rose from 13.8 per cent to 15.6 per cent ²⁸.

08Where: by state

The Bank sets one cash rate for the country; the August 2026 labour force figures (seasonally adjusted) are not evenly spread. Unemployment: Victoria 5.2 per cent, Tasmania 5.0, South Australia 4.6, Queensland 4.5, Western Australia 4.5, New South Wales 4.3, against 4.6 for Australia. Underemployment: Tasmania 6.9 per cent, Victoria 6.8, Queensland and South Australia 6.4, Western Australia 5.8, New South Wales 5.4. The Northern Territory and the ACT have no seasonally adjusted estimate and are left out ²⁸.

09Small business

Small businesses pay far more to borrow than large ones. New loans in July 2026 cost small businesses 7.44 per cent, medium businesses 6.26 per cent and large businesses 5.54 per cent. The rise in rates on outstanding loans between January and July 2026 was similar across sizes: 0.61 points for small, 0.70 for medium and 0.67 for large ³². The indicator small business variable rates rose by 0.75 points in the months of the three rises to May, from 8.25 to 9.00 per cent and from 10.01 to 10.76 per cent ⁴.

The Bank’s Financial Stability Review says a higher cash rate reaches small businesses faster than large corporates: “This is in part because many smaller businesses take out variable-rate business loans secured with a residential property mortgage” ²³. It adds that company insolvencies “have stabilised at around longer run averages at an economy-wide level, although the share of companies entering insolvency remains elevated in the hospitality and construction sectors, where the operating environment has been more challenging, particularly for smaller firms” ³³. By contrast, the same review says “larger companies are expected to remain resilient to higher interest rates and cost pressures” ²³.

10Home buyers

In its 29 September statement the Reserve Bank records that “housing prices have fallen in most capital cities and new housing loans have declined noticeably”, and, two sentences later, “Meanwhile, growth in business investment and debt is strong” ¹. These are two sentences of the same paragraph set beside each other by THE RORT; they are not a Bank finding on who bears the burden.

There is early, unpublished research on buyers. The ABC reported on 25 September findings by James Graham (University of Sydney) and Avish Sharma (Northwestern University, a former Reserve Bank analyst): a typical 0.25 point rise caused “an immediate 5 per cent decline in home purchases”, and cut home ownership by up to about 0.3 points four years later, close to 30,000 households, with younger and lower-income buyers hit hardest. Each later rise did less than the first: “each subsequent rate rise produced a smaller shock than those before it” ³⁴. The research is unpublished and has been reported by one outlet; treat it as early findings.

11Mortgage stress, two measures

Roy Morgan estimates that 32.5 per cent of owner-occupier mortgage holders, 1,786,000 people, were “At Risk” of mortgage stress in July 2026, the highest in 18 years and up 341,000 on a year earlier. Twenty-two per cent (1,210,000) were “Extremely At Risk”, against a two-decade average of 16.4 per cent. Roy Morgan’s own model says a September rise to 4.6 per cent adds only 0.2 points, about 12,000 people ³⁵. Roy Morgan counts people, from a survey model, not households. Its chief executive Michele Levine said: “Mortgage stress has now increased six months in a row, interest rates have increased three times this year, housing prices are coming down in key markets” ³⁵.

The Reserve Bank measures something else. Its March 2026 Financial Stability Review, written after the February and March rises and before May, found that the share of housing loans more than three months in arrears “has declined over the past year, returning to around pre-pandemic levels”, and that the share of mortgagors in severe financial stress has declined since mid-2024 and is small. Most mortgagors have large buffers: “The median mortgage prepayment buffer (relative to a borrower’s minimum scheduled payments) is larger than prior to the pandemic for all income quartiles”, though lower-income households have the thinnest buffers ²³.

The Bank’s May 2026 Bulletin adds that, over five years, the share of housing loan facilities with an offset account rose from around 40 per cent to 55 per cent and with redraw facilities from around 70 per cent to 80 per cent ⁶. Its May 2026 Statement on Monetary Policy says that in 2022-23 the spending of variable-rate households “remained similar to households with fixed-rate mortgages for at least two years after interest rates started to increase” ⁷. The FSR put it this way: “A little over 1 per cent of variable-rate owner-occupier borrowers were estimated to be experiencing a cash flow shortfall as at the end of 2025” ²³.

The two sets of figures measure different things, and neither covers the September rise. Beside them, the Commonwealth Bank’s own filing for the year to 30 June 2026 records strain behind its results: home loan arrears of 0.73 per cent and personal loan arrears of 1.72 per cent “reflecting cost-of-living pressures”, more than 147,000 tailored payment arrangements for customers needing support, and loan impairment expense up 9 per cent to $788 million ³⁶.

12The other side: the Reserve Bank’s case

The Bank does not dispute the cost. On 11 August the Governor said: “I know that these increases have been tough for households with mortgages who are also facing high inflation. But they were necessary.” She added: “High inflation hurts all Australians, especially the most vulnerable, and that is why bringing inflation down is our priority” ¹⁶. On 18 September she told the House Economics Committee: “I recognise that higher interest rates are difficult for Australians with mortgages who are also facing cost-of-living pressures. But reducing inflation is essential”, and that “only a small share are facing severe difficulty with their loan repayments” ³⁷.

On who inflation hurts, she said in September 2024 that “high inflation hurts everyone, and especially the most vulnerable”, and that “most people have experienced similar rates of increase in inflation”. She also said the settings “are causing hardship to some households and businesses” and that “lower income borrowers are over-represented in the group of people who are really struggling” ³⁸.

On the cost of not acting, Governor Lowe said in November 2022 that “bringing inflation back down again after it becomes ingrained in people’s expectations is very costly and almost certainly involves a recession”, and that in the 1970s and 1980s it required “a rise in the unemployment rate of at least 5 percentage points” ³⁹. Governor Bullock said on 28 July 2026: “Putting off a period of tight monetary policy today can mean higher rates and higher unemployment down the track” ⁴⁰.

On gradualism, on 11 August she said: “if we were just focusing on inflation and we weren’t focusing on employment and the economy more broadly, then we could possibly raise interest rates very substantially and induce a very big impact but get inflation down very quickly. The reason why we’ve got this sort of slightly more flexible mandate is to allow us reasonable time to get inflation back down and hopefully avoid some of those costs, particularly on the employment side” ¹⁶.

The data carry the Bank’s side as well. Employment rose by 238,100 over the year to August ²⁸. Most mortgagors have large buffers ²³. Outright owners gain when rates rise, and higher-income households lose more in aggregate ²⁰. And the oil shock makes Australians poorer whatever the cash rate: on 5 May the Governor said, “Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted. We are poorer and there is no way out of that” ⁴¹.

That last answer is also the charge in one sentence: in the same answer the Governor said of the oil shock that “the interest rate rises will not do anything about that” ⁴¹. In her prepared remarks that day she said what the rises are for: “What these increases do, however, is to help to contain the domestic inflationary pressures after the inflation due to oil and related commodity prices eases.” ⁴¹ The Bank’s case, in its own words above, is that inflation must come down, that a period of subdued growth is how it comes down, and that waiting costs more. The record above shows who carries the cash cost of the rises and who is exposed alongside them, on the Bank’s own research and the ABS’s figures: borrowers, lower-income mortgagors with the thinnest buffers, renters already about twice as likely to be in financial stress, and, on a forecast the Bank does not split by cause, more unemployed people, with youth unemployment rising faster than the national rate. Whether the trade is right is a judgment; the figures are here so that readers can make it.

If it’s a rort, we cover it.