Cost of Capital
Cost of Capital measures the level of the price of borrowing in Australia: what the Reserve Bank charges, what lenders charge, and what the government bond market prices. It does not measure how much those rates have moved.
The node is a component of Financing & Volatility Conditions (24710), which in turn sits within the APN Investment Conditions Index™ (24700). It is a national time series, not a geographic one — there is no locality distribution or map at this node.
Its sibling component Interest-Rate Volatility (24714) carries the movement signal. The two are reported separately because a rate can be high and steady, or low and unsettled, and a single combined figure cannot express both.
| Component | Source | Weight |
|---|---|---|
| Cash rate target | RBA F1/F4 | 33.3% |
| Indicator (retail) lending rates | RBA F5 | 33.3% |
| Government bond yields, two-year forward | RBA F2 | 33.3% |
All three inputs are drawn directly from Reserve Bank statistical tables and are shared with Interest Rates (21210). Each is measured against its own 2011–2025 comparison window, and the three are combined at equal weight.
| Measure | End of Sep 2026 quarter | Standardised |
|---|---|---|
| Cash rate target | 4.60% | +1.54 |
| Indicator lending rate | 8.77% | +1.77 |
| Two-year bond yield | 5.02% | +2.35 |
| Composite | — | +1.89 |
Each figure is the last observation of the quarter, which is the observation the reading uses. The standardised column expresses each against its own 2011–2025 comparison window.
The September quarter 2026 reading, +1.8875σ, is the highest of the 53 ranked quarters (position 100.0) and sits above the normal range of −1.3944σ to +1.4731σ. Full input coverage begins in the September quarter 2013; earlier quarters are drawn dashed and are not ranked.
Show the data
| Quarter | Reading | Basis |
|---|---|---|
| Q1 2011 | +0.9099σ | Partial coverage |
| Q2 2011 | +0.9099σ | Partial coverage |
| Q3 2011 | +0.9099σ | Partial coverage |
| Q4 2011 | +0.6810σ | Partial coverage |
| Q1 2012 | +0.7020σ | Partial coverage |
| Q2 2012 | +0.3996σ | Partial coverage |
| Q3 2012 | +0.3996σ | Partial coverage |
| Q4 2012 | +0.1941σ | Partial coverage |
| Q1 2013 | +0.1941σ | Partial coverage |
| Q2 2013 | +0.0762σ | Partial coverage |
| Q3 2013 | +0.0895σ | Ranked |
| Q4 2013 | +0.1171σ | Ranked |
| Q1 2014 | +0.1313σ | Ranked |
| Q2 2014 | +0.0637σ | Ranked |
| Q3 2014 | +0.0944σ | Ranked |
| Q4 2014 | +0.0021σ | Ranked |
| Q1 2015 | −0.2509σ | Ranked |
| Q2 2015 | −0.2902σ | Ranked |
| Q3 2015 | −0.3300σ | Ranked |
| Q4 2015 | −0.2532σ | Ranked |
| Q1 2016 | −0.2703σ | Ranked |
| Q2 2016 | −0.4969σ | Ranked |
| Q3 2016 | −0.5688σ | Ranked |
| Q4 2016 | −0.4757σ | Ranked |
| Q1 2017 | −0.5223σ | Ranked |
| Q2 2017 | −0.5543σ | Ranked |
| Q3 2017 | −0.4861σ | Ranked |
| Q4 2017 | −0.4712σ | Ranked |
| Q1 2018 | −0.4669σ | Ranked |
| Q2 2018 | −0.4593σ | Ranked |
| Q3 2018 | −0.4442σ | Ranked |
| Q4 2018 | −0.4624σ | Ranked |
| Q1 2019 | −0.5789σ | Ranked |
| Q2 2019 | −0.8220σ | Ranked |
| Q3 2019 | −0.9956σ | Ranked |
| Q4 2019 | −1.0353σ | Ranked |
| Q1 2020 | −1.3931σ | Ranked |
| Q2 2020 | −1.3947σ | Ranked |
| Q3 2020 | −1.4164σ | Ranked |
| Q4 2020 | −1.4743σ | Ranked |
| Q1 2021 | −1.4768σ | Ranked |
| Q2 2021 | −1.4768σ | Ranked |
| Q3 2021 | −1.4928σ | Ranked |
| Q4 2021 | −1.3642σ | Ranked |
| Q1 2022 | −1.0804σ | Ranked |
| Q2 2022 | −0.3815σ | Ranked |
| Q3 2022 | +0.4874σ | Ranked |
| Q4 2022 | +0.7761σ | Ranked |
| Q1 2023 | +0.8771σ | Ranked |
| Q2 2023 | +1.4738σ | Ranked |
| Q3 2023 | +1.4545σ | Ranked |
| Q4 2023 | +1.4703σ | Ranked |
| Q1 2024 | +1.4635σ | Ranked |
| Q2 2024 | +1.5934σ | Ranked |
| Q3 2024 | +1.4385σ | Ranked |
| Q4 2024 | +1.5128σ | Ranked |
| Q1 2025 | +1.3658σ | Ranked |
| Q2 2025 | +1.1048σ | Ranked |
| Q3 2025 | +1.0773σ | Ranked |
| Q4 2025 | +1.2157σ | Ranked |
| Q1 2026 | +1.6563σ | Ranked |
| Q2 2026 | +1.6642σ | Ranked |
| Q3 2026 | +1.8875σ | Ranked |
All three inputs sit well above their fifteen-year averages, and the composite reading of +1.89 is the highest this node records across its full history from 2011. Borrowing costs at the end of the September 2026 quarter are more elevated, relative to the recorded window, than in any quarter that window contains.
The bond market carries the most elevated reading of the three at +2.35, ahead of retail lending rates at +1.77 and the cash rate itself at +1.54. The two-year yield rose from 4.41% at the end of June to 5.02% at the end of September and accounts for most of the rise in the composite since the June quarter.
The cash rate target rose by 0.25 percentage points to 4.60% on 30 September, the last day of the quarter. The indicator lending rate, at 8.77%, was unchanged from June, so this reading precedes any response in lending rates to that move.
This reading describes the level of rates only. Interest-Rate Volatility (24714) reads +0.55 for the same quarter, above its own average: rates were both higher and moving more than usual. Elevation and movement are separate measurements of the same market and are not interchangeable.
- The intensity reading of 100.0 is the top of its own record. The position ranks this quarter against the node's own full-coverage history, and the September 2026 quarter is the highest in it. The top observation in any such ranking receives 100.0 by construction, so the figure establishes that this is the node's most elevated quarter on record without measuring by how far it exceeds the next. The underlying reading of +1.89 standard deviations carries that magnitude into the index, which the position alone does not.
- The three inputs share a driver. Cash rate settings, retail lending rates and bond yields all respond to the same monetary policy cycle, so the node reads one dimension from three angles rather than assembling independent evidence.
- Inputs are shared with other nodes. All three also feed Interest Rates (21210). A revision to any of them affects several published readings at once.
- Comparison windows are the platform standard. All three inputs are measured against 2011–2025 and hold sufficient observations; none carries a short-history qualification.
- Comparison basis. The position ranks this quarter against the 53 quarters in which all three inputs are present. That full-coverage basis is the ratified one across the 24700 series; the all-rows basis is retired.
- Signed direction. This component enters the index negated: a higher cost of capital is an adverse condition for investment. Its signed position of 0.0 is the floor of the scale, not an absent value — it reads the lowest of its own recorded range on that frame, which is the same quarter reading the highest on intensity.
The other five components of Financing & Volatility Conditions (24710). Each is independently certified and enters that branch at equal weight.
- Certified 10 September 2026 as a component of Financing & Volatility Conditions (24710), entering that branch at equal weight with its five siblings; recertified 10 October 2026 at the September quarter 2026
- Intensity reading 100.0 and signed reading 0.0, both ranked against 53 full-coverage quarters
- Enters the index negated: a higher cost of capital is an adverse condition for investment
- No input carries a short-history qualification: all three comparison windows hold sufficient observations.
- Findings are presented on the basis of data and evidence alone.
