Key takeaways
The RBA raised the cash rate to 4.60% in September, with major banks divided on whether another increase will follow in November.
Stress-test your mortgage at 0.25 and 0.50 percentage points higher, then check the rest of your household costs.
Compare the combined increase with your available buffer so you can spot a possible shortfall and act before pressure builds.
The Reserve Bank of Australia (RBA) raised the cash rate by 0.25 percentage points to 4.60% on September 2026, marking its fourth increase this year.
The RBA said inflation remained elevated, with some of the risks it had identified in August beginning to materialise.
Attention has now turned to the RBA's next interest rate decision on 3 November 2026. ANZ and Westpac forecast another 0.25 percentage point increase, while NAB and CommBank expect the cash rate to remain unchanged, although neither has ruled out another rise.
These are forecasts, not confirmed outcomes, and they may change as new economic data becomes available.
Rather than trying to predict exactly what the RBA or your lender will do, you can prepare by checking how your finances would respond under a few scenarios.
The useful number is not only the possible increase in your mortgage repayment. It is the combined effect of that increase and the everyday costs your household is already managing.
Phillip Stewart, Senior Mobile Broker in NSW, says a useful stress test should look beyond the mortgage repayment.
“For me, the important thing is looking at the household as a whole rather than simply asking, ‘Can I afford another 0.25% on my mortgage?’ A household might technically be able to absorb the increase, but if they are already using every dollar of their income each month, there isn’t much room left when the next unexpected bill comes along.”
Here is a five-step process for stress-testing your whole household budget.
Step 1: Find your current home loan and household numbers
Start with what is happening in your finances now. Estimates can be useful, but recent statements and bills will give you a clearer starting point.
For your home loan, find:
Your outstanding loan balance
Your current interest rate
Your regular repayment and repayment frequency
The remaining loan term
The end date of any fixed-rate period
The balance of any linked offset account
Any redraw available and the lender’s rules for accessing it.
Your loan balance may be different from the amount you originally borrowed, so use the current figure shown on your latest statement or in your lender’s app.
Check whether the repayment shown is the required minimum or an amount that includes voluntary extra repayments. This matters when you compare today’s payment with a higher-rate scenario.
Next, work out your household’s average monthly after-tax income. Include regular income you can reasonably expect, but keep irregular bonuses, overtime or commissions separate.
You can add them as an upside scenario later instead of relying on them to make the base budget work.
Then gather at least two or three months of transaction history, plus any quarterly or annual bills. Sort spending into:
Mortgage and other debt repayments
Groceries and household supplies
Electricity, gas, water, phone and internet
Fuel, public transport and vehicle costs
Home, car, health and other insurance
Childcare, education and medical costs
Subscriptions, dining out, entertainment and other discretionary spending
Regular savings and other financial commitments.
Annual bills can be easy to miss because they do not appear every month. Divide them by 12 and include that monthly amount in your baseline.
The same approach can help with quarterly council rates, utilities, car registration, and school expenses.
Ruth Van Eekelen, Franchisee at Aussie Bellarine, uses a similar approach to prepare for bills before they arrive.
“Rather than waiting for a bill to arrive, I set up automatic payments or regularly put money aside for expenses like council rates, water and my phone bill.
“By the time the bill comes in, it’s already paid, or the funds are sitting there ready to cover it. It removes that feeling of, ‘Oh no, another bill has arrived,’ and helps me stay in control of those less frequent expenses that can easily catch you by surprise.”
You might also be interested in: How a couple saved $651 month on their home loan in the current rate environment
Step 2: Model a 0.25 and 0.50 percentage point mortgage increase
Once you have your current loan details, use Aussie’s mortgage repayment calculator to model two possible increases:
Scenario A: your current rate plus 0.25 percentage points. This can show the estimated effect of one standard-sized increase if your lender passes it on in full.
Scenario B: your current rate plus 0.50 percentage points. This gives you a wider test in case rates move more than once, or your lender changes its rate independently.
Lenders set their own home loan rates, so they may change them at a different time or by a different amount from the RBA cash rate. A cash rate move doesn't necessarily mean your home loan rate will change by the same amount.
To see what different rate changes could mean for your repayments, you can use Aussie's mortgage repayment calculator to test a few scenarios.
For each calculation, enter the same loan balance, repayment type, and remaining term, changing only the interest rate. Record the estimated monthly repayment at your current rate, then compare it with the 0.25 and 0.50 percentage point increase scenarios.
The difference between each result and your current required repayment is the amount you need for the mortgage part of your stress test.
Phillip suggests taking the calculation one step further by testing the higher repayment within your real household budget.
“The simplest way is to work out what the additional repayment would actually be and then physically take that amount out of your household budget each month.
“For example, if a rate rise meant your mortgage increased by $150 a month, don’t just look at the number and think, ‘We can probably manage that.’ Put the extra $150 aside for two or three months and see how the household actually operates without it.”
Your result will depend on your balance, rate, loan type, and remaining term. A larger balance or shorter remaining term may produce a different increase, which is why your own loan details are more useful than a general dollar estimate.
If you make extra repayments, run the comparison against the required minimum first. Then check whether you could continue the extra amount under each scenario.
This separates what the lender requires from the amount you have chosen to pay faster.
You might also be interested in: How can I negotiate with my lender to get a better rate?
What if your lender has already increased your rate?
If your lender has increased your variable home loan rate, your next repayment may be different from the amount you have been paying.
Check your lender's notification or home loan account to confirm your new rate, when it takes effect and whether your minimum repayment has changed.
You can then use that updated repayment as the starting point for your budget stress test. From there, model another 0.25 or 0.50 percentage point increase to see how your household finances could respond if rates rise further.
Even if the RBA leaves the cash rate unchanged at its next meeting, lenders can still adjust their home loan rates independently.
Step 3: Stress-test the rest of your household budget
The mortgage calculation is only one part of the test. Your budget may also be absorbing changes in food, utilities, insurance, transport, and other essentials.
The Australian Bureau of Statistics (ABS) reported that annual Consumer Price Index (CPI) inflation rose to 4.0% in August 2026, up from 3.5% in July. Annual trimmed mean inflation remained at 3.6%, with both measures above the RBA's 2% to 3% target range.
Price changes also varied across household expenses. According to the ABS, housing costs rose 5.7% in the 12 months to August, while transport costs increased 5.6%, partly reflecting higher automotive fuel prices.
Automotive fuel prices rose 14.8% in August alone, following a 7.5% increase in July. The ABS attributed the August increase to higher global oil prices and the remaining unwinding of temporary federal fuel excise relief measures.
These national figures provide context, but they are not a forecast of what your household will spend next month.
Your costs will depend on where you live, your household size, your providers, and your habits. Use your latest bills and transactions wherever possible.
Work through the following categories one at a time.
Groceries and household supplies
Calculate your average over the past two or three months. If spending varies, use the higher recent month for the tougher scenario. Check supermarket purchases as well as smaller top-up shops, takeaway meals and delivery fees, so costs are not split across different categories and missed.
Utilities and communications
Review your most recent electricity, gas, water, phone, and internet bills. If a bill covers a quarter, convert it to a monthly amount. Consider seasonal use too. A mild-month electricity bill may not represent what you spend during summer or winter.
Transport
Add fuel, public transport, tolls, parking, vehicle registration, servicing and repairs. Fuel can move quickly, so compare the past few fill-ups rather than relying on an older monthly average. For annual registration and servicing, set aside a monthly share.
Insurance and other annual costs
Include home and contents, car, health, life and any other insurance premiums. Use the renewal amount if it is available, rather than last year’s price. Also check council rates, memberships, licences and school expenses that may fall due later.
Discretionary spending
Include subscriptions, dining out, entertainment, shopping, and travel. The purpose is not to remove everything enjoyable from the budget. It is to see which costs could be adjusted temporarily if the stress test shows a gap.
Now build two household scenarios. Add the Scenario A mortgage increase to a realistic higher-cost month, then repeat with Scenario B.
Avoid increasing every category by the headline CPI rate because prices do not move evenly and your spending mix will differ from the national CPI basket.
For each scenario, use this calculation:
Monthly after-tax household income, minus the modelled mortgage repayment, essential living costs, other minimum debt repayments and planned savings, equals your remaining monthly surplus or shortfall.
Run the calculation using both an average month and a more expensive month. A budget that works only when no annual bill, repair or seasonal expense arrives may not leave much room for surprises.
You might also be interested in: What is mortgage stress and how can you manage it?
Step 4: Compare the result with your available buffer
Your stress test should now show one of three broad results: a continuing surplus, a narrow margin, or a shortfall.
If you still have a surplus, check whether it is enough to cover irregular expenses as well as the modelled increase.
If the margin is small, calculate how quickly one larger bill could use it up.
If there is a shortfall, record the exact monthly amount rather than treating it as a general feeling that the budget is tight.
Next, list the funds you could access if costs rose. These might include savings, money held in an offset account, or redraw that is available under your loan’s terms.
Offset and redraw can work differently, including how easily money can be accessed, so check your lender’s conditions before treating either as emergency cash.
Phillip says the right buffer will look different for every household.
“There isn’t one magic number that says a household is ‘safe’. If you’re still comfortably saving, maintaining your normal lifestyle and have accessible funds available for an unexpected expense after allowing for a rate increase, you’re in a much different position to someone who is already ‘overbudget’ to get through the month.”
The amount you may need depends on factors such as essential monthly costs, income stability, dependents, upcoming expenses, and how quickly you could reduce spending.
A useful way to test your buffer is to divide the accessible amount by your modelled monthly shortfall. This would give you a rough estimate of how many months the buffer could cover if nothing else changed.
For example, if a scenario creates a $300 monthly gap and you have $3,000 set aside and accessible, that amount could cover about 10 months of the modelled gap. It would cover less if you also needed it for an emergency repair or another unexpected cost.
Do not count the same money twice. If savings in an offset account are your emergency fund, they should not also appear as a separate savings buffer in the calculation.
The numbers are an important part of a budget stress test, but Ruth also encourages households to consider the beliefs and behaviours shaping their financial decisions.
“I’d encourage you to ask yourself: How do you feel about money? What is your relationship with money? What’s your internal financial narrative?
“In other words, what story do you tell yourself about money?”
She says becoming more aware of that internal narrative can help people reconsider the habits and beliefs influencing their financial decisions.
“Taking the time to understand your internal financial narrative can be incredibly valuable. Once you’re aware of the story you’re telling yourself about money, you can start to challenge beliefs that no longer serve you and build habits that support the future you want to create.”
You might also be interested in: Paying more because you’re self-employed? You might have more options than you think
Step 5: Decide what to act on now and what to keep watching
A stress test is most useful when it leads to a clear next step. With the RBA having raised the cash rate again in September, now may be a useful time to check whether your lender has adjusted your rate and what that could mean for your repayments.
You can also plan ahead for different scenarios without assuming another rate rise is certain.
According to Phillip, there are several signs that may indicate it is worth reviewing your position sooner.
“The biggest warning sign is when the household starts feeling like it’s constantly playing catch-up.
“If you’re no longer putting money into savings or your offset, you’re regularly using a credit card to get through the month, you’ve stopped making extra repayments, or you’re dipping into savings to cover normal household expenses, I’d suggest reviewing things now rather than waiting for the next RBA announcement.”
Actions you may be able to take now include:
Confirming your actual rate, minimum repayment and fixed-rate expiry date
Cancelling or pausing spending you no longer value
Setting aside the modelled repayment difference to test the budget in real life
Directing extra money to an accessible buffer, where appropriate for your circumstances
Checking whether your current home loan rate and features still suit your needs
Booking a home loan review before financial pressure builds.
If your stress test shows a comfortable margin, you may choose to keep watching the RBA, your lender, and your household costs.
Set a date to run the numbers again, or revisit them when your lender changes your rate, a fixed period is approaching its end, your income changes or a major bill renews.
If it shows a small buffer or shortfall, consider reviewing your home loan sooner. Depending on your circumstances, a broker may help you compare your current loan with other options and explain the trade-offs of variable, fixed or split structures.
Refinancing or changing a loan structure will not suit everyone, and fees, eligibility, features and total interest costs need to be considered.
For a deeper look at these options, read our guide to what you can do if mortgage repayments increase.
Turn your stress test into a simple plan
The goal of stress-testing your budget is not to predict exactly what will happen. It is to replace a vague concern with a set of numbers you can review and update.
Start with your current loan and recent spending, including any repayment changes following the latest rate rise.
Model your mortgage at two higher rates, add realistic living costs, and compare the results with funds you could access.
If the numbers show pressure, reviewing your position sooner may give you more time to understand your options.
For Phillip, the value of reviewing things early is having more time to understand what may be possible.
“For me, the biggest thing is getting ahead of the problem. I would much rather a client call me when they’re thinking, ‘Things are getting a little tighter, can we have a look?’ than wait until they’re actually struggling to meet the repayments. There is no cost in having that conversation, and it gives us a chance to understand what’s happening and work through the options before it becomes a problem.”
An Aussie Broker can help you review your current loan, model different repayment scenarios and compare options from participating lenders.
Book a free^ appointment to talk through your home loan and prepare for what may come next.
