With CBA and NAB both predicting a 0.25% rate rise in February, many homeowners are wondering: how much more will I pay? We've done the calculations for different loan sizes to help you prepare.

Impact of a Single 0.25% Rate Rise

If the RBA raises the cash rate by 0.25% and banks pass it on in full, here's what it means for your monthly repayments:

Monthly Repayment Increase (0.25% rise)

Loan Size Monthly Increase Annual Increase
$400,000 +$60 +$720
$500,000 +$75 +$900
$600,000 +$90 +$1,080
$750,000 +$113 +$1,356
$1,000,000 +$150 +$1,800

Based on a 25-year loan term, principal and interest

What If There Are Two Rate Rises?

NAB is predicting a second rate rise in May 2026. If both hikes occur (0.50% total increase), the impact doubles:

Monthly Repayment Increase (0.50% rise)

Loan Size Monthly Increase Annual Increase
$400,000 +$120 +$1,440
$500,000 +$151 +$1,812
$600,000 +$181 +$2,172
$750,000 +$226 +$2,712
$1,000,000 +$302 +$3,624

Impact on Borrowing Power

Rate rises don't just affect existing borrowers. If you're looking to buy, higher rates reduce how much you can borrow:

Estimated Borrowing Power Reduction

  • One 0.25% rise: Approximately $12,000 less borrowing capacity
  • Two 0.25% rises: Approximately $24,000 less borrowing capacity

For a borrower on the average Australian wage

This means if you're close to buying, getting pre-approved before rates rise could give you more purchasing power.

5 Ways to Prepare for Rate Rises

1. Review Your Budget

Can you absorb an extra $100-$200 per month? If not, now is the time to look at where you can cut back or increase income.

2. Build a Buffer

If you have an offset account or redraw facility, try to build up a buffer. Even a few months of repayments saved up provides peace of mind.

3. Check Your Rate

Are you paying more than you need to? The average variable rate is 6.46%, but the lowest rates are around 5.84%. Refinancing could offset a rate rise entirely.

4. Consider Fixing

If certainty is important to you, consider fixing some or all of your loan. Fixed rates have already risen, but they still offer protection if variable rates climb higher.

5. Get Professional Advice

A mortgage broker can review your loan and help you understand your options. This service is usually free to you.

The Silver Lining

While rate rises are never welcome news, there are some positives:

  • Competition remains strong: Lenders are still fighting for business with cashback offers and sharp rates
  • Refinancing can offset rises: Switching to a better rate could save more than a rate rise costs
  • Your equity may be growing: Property prices are still rising in most areas

What's Your Current Rate?

If you don't know your current interest rate off the top of your head, that's a sign it's time for a review. Many borrowers are paying 0.5% to 1% more than they need to - that's $3,000 to $6,000 per year on a $600,000 loan.

Get a Free Home Loan Health Check

Find out if you're paying more than you need to. We'll compare your loan against the market and show you potential savings - no obligation.

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