All four big banks now expect a fifth RBA rise. What it does to a rental's cash flow and yield
The big four expect the RBA to lift rates to 4.85% on 3 November. What another rise does to an investor's cash flow over ten years, and to net yield.
All four of Australia's big banks now expect the Reserve Bank to lift the cash rate to 4.85% on Tuesday 3 November, after CBA and NAB dropped their calls for a hold (Savings.com.au, 28 October 2026).
Why the banks changed their minds
The ABS said on 28 October that annual CPI inflation reached 4.3% in September, up from 4.0% in August.
CBA's economists said the figures "affirmed our view that a rate hike is on the cards next week". NAB said the RBA is "a long way from declaring victory on inflation". Westpac already expected a rise and says the risk of another, "most likely in February", has grown (Savings.com.au, 28 October 2026).
The cash rate has been 4.60% since the RBA's 29 September decision. A move to 4.85% would be the fifth rise of 2026 and take the rate to a level last seen in 2008 (investingLive, 29 October 2026).
Rents are no longer rising fast enough to soak that up. Cotality puts the national median rent at AUD 713 a week after a 0.5% rise in the September quarter, with vacancy at 2.1% (Cotality, 9 October 2026). The national gross yield is 3.85% (Cotality, 1 October 2026).
What a fifth rise does to the cash flow, now and in ten years
The Cash Flow Analyser in Stresst takes the price, loan, rate, rent and running costs, shows the monthly position on an interest-only loan, then projects it ten years ahead with rent growth and cost inflation.
Take an illustrative AUD 960,000 investment property in New South Wales, roughly the price at which Cotality's median rent gives its 3.85% yield. The loan is 80%, or AUD 768,000. Rent is AUD 3,090 a month (AUD 713 a week), with a 7% letting fee, AUD 62 a month set aside for empty weeks and AUD 600 a month for strata, insurance and maintenance. The rates are illustrative too.
| Interest rate | Monthly interest | Net monthly cash flow | Year 1 net cash flow |
|---|---|---|---|
| 6.90% (today) | AUD 4,416.00 | minus AUD 2,204.30 | minus AUD 26,452 |
| 7.15% (+0.25) | AUD 4,576.00 | minus AUD 2,364.30 | minus AUD 28,372 |
| 7.40% (+0.50) | AUD 4,736.00 | minus AUD 2,524.30 | minus AUD 30,292 |
Rents rising won't close the gap quickly. With the analyser's Average settings (3% rent growth, 3% cost inflation), the shortfall at 7.15% is still AUD 20,283 in year 10. Switch rent growth to its Strong 5% setting and year 10 is still minus AUD 11,141.
What the yield looks like once buying costs are in
The Rental Yield calculator answers a simpler question: what the property earns against everything it cost to buy, before any borrowing.
NSW transfer duty on AUD 960,000 is AUD 37,387 under the 2026/27 rates (Revenue NSW), which the free Stamp Duty Calculator in Stresst works out. Add an illustrative AUD 2,500 for legal and conveyancing, and buying costs come to AUD 39,887.
With the same rent and AUD 878 a month in operating costs, Rental Yield returns a gross yield of 3.86% and a net yield of 2.65%, on AUD 26,544 of net annual income.
That 2.65% is what the property earns on everything it took to buy. The illustrative loan costs 7.15% after a fifth rise, and that gap is why the table above runs at a loss.
For your own tax position, including stamp duty, speak to a qualified Australian tax adviser.
Run your own numbers in Stresst
Every worked figure above came out of the Stresst app. Put in your own price, loan, rent and costs, and you'll see your cash flow at today's rate and the next one, and your yield after buying costs, in a couple of minutes.
The Cash Flow Analyser and Rental Yield are part of Premium, with the other property investment tools, Australia Affordability and PDF export on every calculator, and Premium starts with a 7-day free trial. Investment Property Yield, the Stamp Duty Calculator, Mortgage Payment, Total Purchase Costs and the Refinance Calculator are free.
The RBA announces its decision at 2.30pm AEDT on Tuesday 3 November, so there's time to run both rates first. On iPhone, Stresst is in beta through Apple's TestFlight app.
Download Stresst free on Google Play
Join the Stresst iPhone beta on TestFlight
Know your numbers before you commit.
Sources
- Savings.com.au, "Big four unite: RBA to lift cash rate to 4.85%", 28 October 2026. https://www.savings.com.au/news/all-big-four-banks-back-november-rate-hike
- investingLive, "RBA set for fifth 2026 hike to 4.85% as banks flag risk of another move in February", 29 October 2026. https://investinglive.com/central-banks/rba-set-for-fifth-2026-hike-to-4-85-as-banks-flag-risk-of-another-move-in-february/
- Australian Bureau of Statistics, "CPI rose 4.3% in the year to September 2026", 28 October 2026. https://www.abs.gov.au/media-centre/media-releases/cpi-rose-43-year-september-2026
- Reserve Bank of Australia, Statement by the Monetary Policy Board: Monetary Policy Decision, 29 September 2026. https://www.rba.gov.au/media-releases/2026/mr-26-27.html
- Reserve Bank of Australia, Schedule of All Releases, accessed 31 October 2026. https://www.rba.gov.au/schedules-events/schedule.html
- Cotality, "Rental growth loses momentum as vacancy rates rise", 9 October 2026. https://www.cotality.com/au/insights/articles/rental-growth-loses-momentum-as-vacancy-rates-rise
- Cotality, Home Value Index, September 2026 results, 1 October 2026. https://discover.cotality.com/hubfs/Article-Reports/COTALITY%20HVI%20OCT%202026%20FINAL.pdf
- Revenue NSW, "How to calculate transfer duty", 2026/2027 rates, accessed 31 October 2026. https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/transfer-duty/understanding-transfer-duty/calculate-transfer-duty
This article is general information only and is not financial, tax or legal advice.