RBA hikes 25bp to 4.85% on a 6-3 vote. The guidance line dropped and a $600,000 interest-only investor loan picks up $125 a month

This article is general information only. It does not consider your personal circumstances and is not tax, credit or investment advice. Speak to a registered mortgage broker, tax agent or licensed property adviser before acting on any of the figures below.

What the RBA actually did#

The Reserve Bank of Australia's Monetary Policy Board lifted the cash rate target by 25 basis points to 4.85% at its scheduled 2:30pm AEDT release on Tuesday 3 November 2026 (RBA, Statement by the Monetary Policy Board, mr-26-30).

It is the fifth hike of 2026. The sequence now reads: February, March, May, September, November. The 29 September move to 4.60% carried unanimously. This one did not.

4.85% is the highest cash rate setting in Australia since late 2008, roughly 18 years (ABC News, RBA lifts interest rates to highest level in 18 years). The last time the cash rate carried a 4 in front of it was at the back end of the pre-GFC cycle.

The move was telegraphed by the September quarter 2026 CPI print at 4.3% headline and 3.6% trimmed mean on 28 October, which sat above the 4.2% market consensus (ABS, Consumer Price Index Australia September 2026). Westpac and ANZ carried the 4.85% call. Commonwealth Bank and NAB had a hold at 4.60% and were offside on the day.

The 6-3 split is the story inside the story#

The Monetary Policy Board split six to three, with six members voting for the 25 basis point move and three members voting to hold at 4.60% (Babypips, RBA raises cash rate to 4.85% in a 6-3 split vote).

This is the first recorded dissent of the current tightening cycle. The September decision carried 9-0. The May and March 2026 decisions each carried unanimously as well. A three-member dissent on a nine-member board is not a casual disagreement. It means the pause camp now has a visible floor and a public position.

For a landlord reading the tea leaves, the 6-3 matters more than the 4.85% itself. A split vote at the point of a hike makes a second consecutive hike at the 8 December meeting materially harder to engineer. The dissenters would have to flip, and the data that would force them to flip would be a labour force print on 11 December showing unemployment still below the RBA's forecast path, together with an October monthly CPI indicator on 26 November showing no softening.

Markets priced the split as mildly dovish on the 2 November curve inside 30 minutes of the release. The AUD softened and the three-year bond rallied. That is a rates market telling a reader the hike is probably the last of this cycle.

The guidance line that is gone#

The second piece of substance in the November statement is what is no longer there.

The 29 September 2026 statement carried the sentence that the board was prepared to tighten further if required to return inflation to the target band. That sentence does not appear in the November release (ABC News, RBA hikes interest rates for fifth time this year in split decision). The board kept the standard data-dependence language and the vigilance against upside inflation risks, but the active hawkish line was retired.

In RBA statement craft, the removal of a forward-leaning line is usually a bigger signal than the words that replace it. The board is reserving optionality rather than pre-committing.

What that means for the 8 December decision is a real coin-toss. A labour force print that keeps unemployment below 4.8% and holds underemployment flat would push the balance toward a further 25 basis point move to 5.10%. A softer labour market read would validate the three dissenters and anchor a hold at 4.85%. Either outcome is now live.

What the hike costs in dollars#

The raw arithmetic on a 25 basis point cash rate move is simple and worth having at hand for a December statement sanity check.

On an interest-only line, the extra monthly cost per $100,000 borrowed is:

• $100,000 x 0.25% / 12 = $20.83 a month or $250 a year

Scale that out across the typical investor loan sizes seen on a landlord's portfolio:

• $400,000 loan: $83 a month or $1,000 a year
• $600,000 loan: $125 a month or $1,500 a year
• $750,000 loan: $156 a month or $1,875 a year
• $900,000 loan: $187.50 a month or $2,250 a year
• $1.2 million loan: $250 a month or $3,000 a year

On a 30-year principal-and-interest schedule at the post-pass-through rate band, the monthly step is slightly smaller than the interest-only number, because a larger share of the payment keeps hitting principal on day one. On a $600,000 P&I loan the monthly step is roughly $98 a month. On $900,000 it is about $147 a month.

These are the raw cash flow steps before any deductible interest offset. They are what hits the statement.

The deductible interest offset#

For a landlord in the 37% marginal income tax bracket, every extra dollar of deductible interest on an investment loan reduces income tax by 37 cents (ATO, rental expenses).

On that $600,000 interest-only example, the extra $1,500 a year in interest translates to about $555 of additional deductible value at 37% and $675 at the 45% top rate. The net after-tax cost on the 37% bracket is about $945 a year.

On $900,000 the gross annual step is $2,250 and the net after-tax cost at 37% is about $1,418. On $1.2 million the gross is $3,000 and the net is roughly $1,890.

The deduction cushions somewhere between a third and just under half of the gross impact depending on the marginal bracket. It does not eliminate the hit, and it does not help with the cash flow at the point the statement lands, because the refund arrives at the next tax return.

Depreciation on second-hand plant and equipment remains locked out under the 9 May 2017 rules, so for most negatively geared portfolios the interest line is still the single biggest deductible item. A further 25 basis points on a $900,000 loan adds enough deductible interest to shift the taxable loss on the schedule, but it is not a strategy, it is a consolation.

Pass-through timing from the Big 4#

The pass-through calendar after the 29 September 2026 move landed on 9 October across the four majors (Canstar, Westpac NAB and ANZ announce rate hikes). That is a seven to ten business day lag from the RBA announcement to the effective variable rate change on customer statements.

Running that calendar forward from today:

• By Thursday 5 November 2026: expect each of CBA, Westpac, NAB and ANZ to publish a variable rate announcement. Historically each has passed the Big 4 Tuesday hike through in full on the standard investor and owner-occupier variable rates.
• By mid to late November 2026: the new variable rate lands on statements. First repayment at the higher rate is typically the next monthly cycle.
• Fixed rate book: new fixed offers re-price within 24 to 48 hours of a cash rate surprise. Any October fixed rate offer written on a 4.60% peak assumption that was still on a borrower's desk has already been withdrawn or re-rated.

For a landlord sitting on a current pre-approval, the practical timing is that the serviceability test underpinning that approval was almost certainly run at the previous rate. New applications submitted after 5 November will be assessed on the 4.85% base plus the regulator's 3% serviceability buffer.

Serviceability math and the 5.10% stress test#

The Australian Prudential Regulation Authority (APRA) requires authorised deposit-taking institutions to assess loans at the greater of the customer's current rate plus 3%, or the lender's floor rate (APRA, Prudential Practice Guide APG 223).

With the cash rate at 4.85% and Big 4 investor variable rates about to settle in the low to mid 7% range after the pass-through, the serviceability test assessment rate steps up to roughly 10.25% to 10.50% depending on the lender.

For any application filed in the next six weeks, run the broker calculation at the 8 December tail scenario of 5.10%, not 4.85%, which pushes the assessment rate closer to 10.50%. Pre-approvals written on the September serviceability test will be re-run at submission if the formal application goes in after the pass-through lands.

The sharpest edge in this cycle is the interest-only expiry wall. A portfolio loan rolling from interest-only to principal and interest in the next six months hits the serviceability test at the new rate plus the P&I repayment switch, and the combined step on a $800,000 loan can easily lift monthly repayments by $900 or more versus the interest-only base. That cliff was already tight at 4.35% in 2024. At 4.85% it is harder again.

The rent review calendar in December#

Rents are not following the cash rate. SQM Research had the national vacancy rate at 1.4% in September 2026, with Sydney unit rents softening but the national series tight (SQM Research, monthly rental vacancy). Cotality advertised rents sat at 5.7% a year to August and the ABS CPI rents measure for sitting tenants ran at 3.6% a year to July (ABS, Consumer Price Index Australia).

For a December rent review on a 12-month renewal, the useful reference numbers are the local vacancy rate and the median advertised rent in the suburb, not the 4.3% all-items CPI headline. Several state tenancy regulators have made clear that CPI is not a ceiling and not a formula, it is one of several factors (NSW Fair Trading, Rent increases).

The practical point for the December calendar is that the 4.85% cash rate does not land on a tenant's bank statement, so framing a rent review as a pass-through of the mortgage increase is not defensible under any jurisdiction's residential tenancies legislation. What is defensible is the gap between the sitting rent and the current local market rent. In a 1.4% vacancy environment that gap is often $30 to $60 a week on a mid-tier dwelling, and a review grounded in comparable advertised rents is the one that holds at the tribunal.

The 8 December 2026 decision#

The next scheduled RBA board meeting is Tuesday 8 December 2026 with the decision at the standard 2:30pm AEDT release (RBA, Monetary Policy).

Three data points between now and then matter.

First, the ABS Monthly CPI Indicator for October 2026, released on 26 November. A print above 4.3% on the monthly annual rate would materially raise the probability of a further hike. A print at or below 4.0% on the monthly would validate the three dissenters.

Second, the ABS Labour Force release for November 2026, released on 11 December. This is the last big release the board has before the December decision. Unemployment at or below 4.8% keeps the hike probability live. A reading at 4.9% or higher puts the dissenters in charge.

Third, the Westpac-Melbourne Institute December Consumer Sentiment, released on 9 December. This one lands the day after the board meets so it does not inform the call itself, but it feeds the February 2027 statement on monetary policy framing.

The honest base case into December 8 is a hold at 4.85%. The board rarely hikes twice in consecutive meetings when the vote is already split three ways on the first move, and the removed forward guidance is doing some work here as well. But a single hot labour force print would flip the balance back. The curve is pricing roughly a 35% probability of a further move to 5.10%, and that is a reasonable reflection of the data risk in front of the board.

What to do in the next 14 days#

The useful actions for a landlord between today and the Big 4 pass-through announcement sit on four tracks.

Mortgage and refinance. Confirm with the broker whether any October fixed rate offer is still available before 5 November. Re-run any serviceability check at 5.10% to carry the December 8 tail risk. If a portfolio loan rolls from interest-only to P&I in the next six months, bring the broker conversation forward to this fortnight because the combined IO expiry and 4.85% repricing is a serviceability cliff that gets harder the longer it is left.

Cash flow and tax. Note the gross extra interest for the year at the 25 basis point step on each investment loan. Capture it in the deductible interest tracking for the 2026-27 return. For landlords already working through the 2 November self-lodger deadline that rolled from Saturday 31 October, the deductible interest step does not change the 2025-26 schedule, but it is the single biggest moving line for FY2026-27 projection work.

Rent review calendar. If a renewal lands in December or January, build the review around local vacancy and comparable advertised rents, not the 4.3% CPI headline. The 1.4% national vacancy and tight capital city rental markets still support a review at or near the market trajectory. Do not anchor the ask to the mortgage statement because that framing does not survive a tribunal challenge.

The next two data points. The 11 November ABS Lending Indicators for the September quarter and the Cotality October 2026 Home Value Index, both landing in the next week, are the two series that will either confirm the hike was the right call or show credit supply contracting under the weight of the 29 September move already. Either outcome shapes the early 2027 framing more than the November statement itself.

Where Propkt helps#

Propkt tracks every rental property's income, expenses, deductible interest and mortgage pass-through statements in one place. When the 4.85% rate shows up on a landlord's next statement, the extra monthly interest lands in the deductible interest line of the 2026-27 tax summary automatically. Our mortgage calculator runs serviceability stress tests at the next-meeting scenario, and the rent review planner surfaces local vacancy data and comparable rents at the postcode level instead of the CPI headline. Try the mortgage calculator or sign up for a free trial to see the November rate change land on your portfolio in real numbers.

The RBA just pulled the cash rate to 4.85% on a split vote. The December 8 decision is a genuine coin-toss. The pass-through hits statements in the next three weeks. The job between now and then is the broker call, the serviceability rerun at 5.10%, and a clean read on the rent review calendar grounded in local market data rather than the CPI line.