The OurTop10 index puts the probability of a rate rise at 82.4 per cent. All four major banks expect an increase, raising the prospect of higher repayments for variable-rate borrowers.
By the online editorial team
Australian households with a mortgage could face another squeeze as expectations grow that the Reserve Bank of Australia will raise interest rates on September 29. The OurTop10 Rate Prediction Index, known as ORPI, puts the probability of an increase at 82.4 per cent, compared with a 15.6 per cent chance of rates remaining unchanged. These are forecasts; the central bank has yet to make its decision.
The cash rate stands at 4.35 per cent, following three increases since the start of the year. Another rise of 0.25 percentage points would take it to 4.60 per cent, marking the fourth increase of 2026. At its most recent meeting in August, the RBA left rates unchanged but kept the option of further tightening open if upside inflation risks materialised.
Most economists on OurTop10’s panel expect an increase: eight of the 10 predict a rise, while two anticipate a hold. The index’s 82.4 per cent reading is not simply the share of economists forecasting a hike. It combines their assessments with expectations drawn from Australian cash rate futures.
Commonwealth Bank, NAB, Westpac and ANZ also expect a September increase. Their outlooks beyond that meeting differ: ANZ forecasts another rise in November, while CBA and Westpac see a further increase as a risk. Two quarter-point rises would lift the cash rate to 4.85 per cent.
Persistent inflation is driving the concern. Mansour Soltani, OurTop10’s head of research, argues that price pressures have proved more stubborn than expected despite the increases already delivered. In his view, another rise would help reinforce the RBA’s credibility, although it could deepen financial difficulties for households already struggling.
Governor Michele Bullock has highlighted both tight labour market conditions and the risk that the global energy price shock will feed into broader price increases across the Australian economy. The central bank is concerned that these effects could make inflation more persistent and delay its return to target.
For borrowers, the impact would depend on their outstanding loan balance, remaining loan term and lender’s response. A cash rate increase does not produce the same repayment change for every household: the amount passed on to the mortgage interest rate matters.
An illustrative calculation shows the potential effect. For a $730,000 outstanding loan, with 30 years remaining and monthly principal-and-interest repayments, an increase from 6 per cent to 6.25 per cent would lift repayments from approximately $4,377 to $4,495 a month. That is about $118 extra each month, or just over $1,400 across 12 months. The calculation excludes fees and assumes the higher rate remains unchanged throughout that period.
This is a hypothetical example, rather than a bank quote or an estimate applicable to every borrower. It nevertheless shows how a quarter-point increase could further reduce the money available for other household expenses.
The RBA will assess economic data and the outlook before deciding. Its latest statement acknowledged signs of an economic slowdown but said inflation remained too high. The decision will determine whether the pause continues or borrowing costs face another increase.
