Key takeaways
The RBA lifted the cash rate to 4.60% in September, marking the fourth increase of 2026.
If your lender changes your variable rate, your repayments may rise depending on your loan and its remaining term.
Reviewing your budget, loan rate and features can help you understand which options may suit your circumstances.
If repayments are becoming difficult to manage, contact your lender early to discuss hardship assistance.
Since this article was first published, the Reserve Bank of Australia (RBA) has increased the cash rate four times. Following its September 2026 decision, the cash rate is now 4.60%.
The latest available Australian Bureau of Statistics data shows annual CPI inflation rose to 4.0% in August 2026, up from 3.5% in July. Trimmed mean inflation remained at 3.6%.
What this means for your mortgage depends on your lender, loan type, loan balance and remaining term. Lenders set their own home loan rates and may not pass on an RBA change in full or at the same time.
If your repayments have increased, understanding why they changed can help you work out what to review next.
This article explains how higher rates can affect different borrowers and the practical steps you may be able to take.
How rising interest rates affect different types of buyers
An increase in interest rates generally means higher borrowing costs, but the real-world impact varies widely.
Borrowers with larger loans, tighter household budgets or less financial buffers may feel changes more quickly. Others may be less affected, particularly if they have strong income stability, significant equity, or savings in offset accounts.
After reducing the cash rate during 2025, the RBA increased it by 0.25 percentage points in February, March, May and September 2026. These four increases brought the cash rate to 4.60%.
Borrowers with variable-rate home loans may have seen their repayments increase where their lender passed on some or all of these changes. The effect will vary depending on the lender, loan balance, interest rate, and remaining loan term.
You might also be interested in: RBA rate tracker – See the latest cash rate and rate movements from lenders on Aussie’s panel**
Impact on first-home buyers
How rate rises can affect first-home buyers
For first-home buyers, higher interest rates can affect both affordability and borrowing power.
Lenders assess whether borrowers could manage repayments at an interest rate above the rate offered on the loan.
APRA mortgage serviceability buffer is currently 3 percentage points. Lenders may apply different assessment policies.
Abbie Ffrost, Aussie Broker at Aussie Toowoomba, said some customers worry that an application approved before a rate increase may no longer be affordable.
However, she explained that the lender’s assessment had already allowed for a higher rate in the customer examples she was discussing.
“Yes, it does have an effect on assessment amounts, but in reality, if the loan was submitted and approved last week, we’ve actually already buffered for that rate rise and it is affordable for them," she said.
It’s more about saying, ‘Look, it is still affordable for you. Yes, your actual repayment will increase beyond what we told you it was, but it is still affordable.’ It’s not that the rate has gone up and it’s no longer affordable for you," she added.
As home loan rates rise, the rate used in these assessments may also increase, which can reduce estimated borrowing capacity.
Higher rates may also mean larger repayments relative to income, leaving less room for other expenses.
In some cases, this can lead buyers to delay entering the market or reconsider property type, location, or price range.
What first-home buyers can do to prepare
First-home buyers can take steps to prepare for potential rate increases by:
Building stronger savings buffers
Reducing non-essential debts where possible
Understanding borrowing capacity early
Stress-testing repayments before committing to a purchase
Le-On Lim, Aussie Broker at Aussie Victoria Park, said preparing to buy can begin with understanding whether you’re ready to move forward now or need a plan to improve your position.
“You’re either in a position to buy now, and we’re ready to go, or we need to work out a plan towards getting into a position where you can eventually buy," he said.
Other options that may help first-home buyers
Depending on eligibility and personal circumstances, some buyers explore options such as:
Government-backed schemes that may allow eligible buyers to purchase with a smaller deposit
Paying Lenders Mortgage Insurance (LMI), an additional cost that may help eligible buyers enter the market sooner with a smaller deposit, subject to lender criteria and conditions
Family guarantee structures
Buying below their maximum borrowing capacity
Eligibility criteria apply to all schemes, and professional guidance can help clarify what’s suitable.
You might also be interested in: What Aussie Brokers are seeing in today’s rate environment
Impact on upgraders
How rate rises can affect upgraders
Upgraders often have existing equity, but higher interest rates can still affect their options.
Increased assessment rates may reduce borrowing capacity, even if property values have risen. Larger loan sizes can also mean higher repayments, which may affect cash flow.
Timing can become more complex when buying and selling don’t align as planned.
If bridging finance is being considered, it’s important to understand the interest rate, fees, repayment requirements and how long you may need to carry the bridging loan if your existing property takes longer to sell.
What upgraders can do
Preparation steps may include:
Assessing usable equity early
Reviewing affordability under higher-rate scenarios
Carefully planning buying and selling timelines
Strategic options for upgraders
Some upgraders consider:
Reviewing available equity and borrowing requirements before making a decision.
Making trade-offs on property type or location
Structuring loans to manage cash flow during transition periods
You might also be interested in: Could falling premium house prices make it easier to upsize?
Impact on property investors
How rate rises can affect investors
For investors, higher interest rates can increase holding costs and place pressure on cash flow, particularly for negatively geared properties.
Lending policy changes may also affect how easily investors can expand or restructure their portfolios.
Over time, higher rates can influence investment yields and overall portfolio performance.
What investors can do to prepare
Investors may consider:
Reviewing rental income against interest costs
Modelling cash flow under higher-rate scenarios
Prioritising liquidity and financial buffers
Strategic options for investors
At a high level, some investors explore:
Loan reviews and restructuring
Fixing or splitting loans to balance certainty and flexibility
Reviewing long-term holding versus consolidation strategies
Tax and investment considerations vary, and professional advice is recommended.
You might also be interested in: What happens if rates rise during your property purchase
How an interest rate increase could affect borrowing power
When interest rates rise, lenders’ assessment rates typically increase, which can reduce how much a borrower is able to qualify for, even if their income hasn’t changed.
This can affect:
First-home buyers entering the market
Upgraders relying on equity
Investors expanding portfolios
In simple terms, buffer rates are designed to test whether a borrower could manage repayments if rates increased further, helping reduce financial stress.
Impact on property prices and market activity
Higher interest rates may reduce how much some buyers can borrow, which can affect demand and the prices buyers are able to pay.
However, property market outcomes can vary between locations and property types because interest rates are only one influence on supply, demand, and prices.
How higher interest rates can affect household budgets
An increase in interest rates can affect household budgets in several ways:
Higher mortgage repayments
Reduced discretionary spending
Slower progress toward savings goals
For example, young families may need to reassess childcare or education expenses, while single-income households may feel cash-flow pressure sooner. Investors managing multiple properties may see cumulative impacts across their portfolio.
What to do if your mortgage repayments increase
Check what has changed
Start by reviewing the notice from your lender. Check your new interest rate, when it takes effect, and how much your required repayment will change.
If you have a fixed-rate loan, confirm when the fixed period ends and which rate will apply afterwards.
Review your household budget
Update your budget using the new repayment amount and include regular costs that are easy to overlook, such as insurance, utilities, childcare, subscriptions, and annual bills.
You can also model a further rate increase to see how much room you would have if repayments rose again.
Check your loan rate and features
Review whether your current interest rate remains competitive and whether you are paying for loan features you use.
If you have an offset account, money held in the account may reduce the portion of your linked home loan charged interest, subject to the terms of your loan.
Reviewing your home loan doesn’t necessarily mean changing lenders. Abbie said approaching the customer’s existing lender is generally her team’s first step.
“Our first protocol is always to ask their current bank for a discount. If they want to refinance, we have a conversation around the intent of the refinance," she said.
"If the intent is to reduce their outgoings, then we can absolutely look at that. It’s all dependent on the customer’s circumstances," she added.
Compare the full cost of refinancing
Refinancing may provide access to a different interest rate, loan structure, or features, but it won’t suit every borrower.
Consider application, valuation, settlement and discharge fees, any fixed-rate break costs and whether extending the loan term could increase the total interest paid.
Abbie said customers sometimes assume refinancing automatically means restarting their home loan with the maximum available term.
“Where possible, we try to keep the customer’s loan term the same as what they’ve already got when we refinance them. There’s a bit of a misconception in the market that when people refinance, the loan is automatically put back to the maximum term," she said.
Build or protect your financial buffer
If your budget allows, consider maintaining funds for unexpected expenses rather than committing every available dollar to repayments.
The amount of buffer that may be appropriate will depend on your income, expenses, and household circumstances.
What if you’re struggling to make your repayments?
If you think you may have difficulty making a repayment, contact your lender as early as possible.
The earlier you contact your lender, the more time you may have to explore the support available.
Depending on your circumstances, your lender’s hardship team may discuss options such as temporarily reducing or pausing repayments or changing the terms of your loan.
A hardship arrangement can have longer-term costs or other implications, so ask your lender to explain how any proposed change may affect your loan balance, interest and future repayments.
Support is also available through the National Debt Helpline on 1800 007 007.
A financial counsellor can help you understand your options and may be able to speak with your lender on your behalf.
How a mortgage broker can help when repayments rise
If your repayments have increased, an Aussie Broker can help you understand what changed and review whether your current home loan still suits your circumstances.
This may include:
Reviewing your current interest rate, repayments and loan features
Asking your existing lender whether a more competitive rate may be available
Comparing suitable options from Aussie’s panel of 25+ lenders**
Modelling how different rates, repayment amounts or loan terms could affect you
Explaining the potential costs and trade-offs of refinancing
Helping you prepare before a fixed-rate period ends
Refinancing won’t be the right option for everyone. An Aussie Broker can help you compare staying with your current lender against switching, taking into account available rates, features, fees, eligibility and your goals.
Le-On encouraged customers to focus on the parts of their home loan they can review.
“My general advice would be, don’t fret about the stuff you can’t change. Why don’t you find out and try to do something you can? That starts with speaking to an Aussie Broker," he said.
Book a free^ chat with an Aussie Broker to review your options.
