Australian inflation jumps to 4.3%. What this year's rate rises have done to a mortgage, and to how much you can borrow

Australia's annual inflation rate rose to 4.3% in September, up from 4.0% in August, the Australian Bureau of Statistics said on 28 October 2026.

Where the inflation is coming from

Prices rose 0.8% in September alone and 1.3% over the September quarter (ABS, 28 October 2026). Housing was the biggest contributor, up 5.2% on the year, driven by the cost of new dwellings and electricity. Transport was up 8.7%, with fuel prices rising 9.4% in a single month.

Trimmed mean inflation, the measure the Reserve Bank watches most closely because it strips out the biggest swings, was 3.6%. The RBA's target is 2 to 3%.

The RBA has already raised the cash rate four times this year, from 3.60% to 4.60% between February and September. Speaking to a Senate committee the same morning, Governor Michele Bullock said inflation would likely be higher than the Bank's August forecast, and that the question was "whether the tightening in monetary policy to date will be sufficient". The Board meets on 2 and 3 November.

What a year of rises has cost a borrower

The Mortgage Payment calculator, free in the Stresst app, shows the monthly repayment and total interest for any loan, rate and term in Australian dollars.

Take an illustrative AUD 600,000 variable loan over 30 years, and assume each rise has been passed on in full:

• January, at 5.60%: AUD 3,444 a month
• Today, at 6.60%: AUD 3,832 a month, AUD 387 more than in January
• After a fifth rise in November, at 6.85%: AUD 3,932 a month, AUD 487 more than in January

That's about AUD 4,650 a year extra at today's rate. Over the full 30 years, total interest rises from AUD 640,011 to AUD 815,360 if the rate stays at 6.85%.

What it has done to how much you can borrow

For buyers, the bigger change is the borrowing limit. Lenders test a new loan at a higher rate than the one you'll pay, so every rise is magnified.

The Australia Affordability calculator shows this. You enter the loan, the rate, the term, your combined monthly take-home pay and your existing commitments. It adds three points to the rate (with a 5.5% floor), works out the repayment at that assessment rate and compares it with 30% and 35% of your income after commitments. It then shows the largest loan that fits each.

An illustrative couple takes home AUD 14,500 a month and has AUD 750 of other commitments.

In January, at 5.60%, the assessment rate was 8.60%. The AUD 600,000 loan took 33.9% of their income, inside the 35% line, and the largest loan at 35% was AUD 620,158.

Today, at 6.60%, the same loan takes 37.0% and fails. The largest loan at 35% is AUD 567,405, about AUD 52,750 less than in January.

After a November rise it would be AUD 555,390. That's almost AUD 65,000 of borrowing power gone in under a year, for a household whose income hasn't changed.

Run your own numbers in Stresst

Every figure in this article came out of the Stresst app. Put in your own loan, rate and income and you'll see your repayment and your borrowing limit at today's rate and after the next rise in a couple of minutes.

Mortgage Payment is free, along with Total Purchase Costs, the Overpayment calculators, the Refinance Calculator and the Stamp Duty Calculator. Australia Affordability is part of Premium, which also covers the LMI Estimator, First Home Guarantee, Negative Gearing, the property investment tools and PDF export on every calculator, and starts with a 7-day free trial.

The RBA announces its decision on 3 November. Run your numbers at today's rate and at 0.25 higher before then. 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

• 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, "Cash Rate Target", accessed 28 October 2026. https://www.rba.gov.au/statistics/cash-rate/
• Reserve Bank of Australia, Michele Bullock, "Opening Statement to the Senate Economics Legislation Committee", 28 October 2026. https://www.rba.gov.au/speeches/2026/sp-gov-2026-10-28.html
• Reserve Bank of Australia, "About Monetary Policy", accessed 28 October 2026. https://www.rba.gov.au/monetary-policy/about.html
• Reserve Bank of Australia, "Board Meeting Schedules", accessed 28 October 2026. https://www.rba.gov.au/schedules-events/board-meeting-schedules.html