What The RBA Rate Move Means For You

Daniel Green from Green Finance Group, Australia’s most awarded commercial finance broker, discusses the recent increase in interest rates and what it could mean for you.

By now you’ve likely seen the headlines – the RBA cash rate moved up to 4.10% earlier last week, and the noise around the broader economy (globally) and what happens next, isn’t letting up.

I’ll leave the forecasting to the economists. What I can do is help you understand what it means for you right now, so you can move forward with confidence.

If you already have a variable-rate mortgage
Your lender may have already passed on the increase, or they’re about to. A 0.25% increase roughly translates to*

$65-$70/month more on a $500,000 loan
$95-$105/month more on a $750,000 loan
$125–$135/month more on a $1,000,000 loan

Repayments are only part of the picture. Loan structure, offset accounts, repayment flexibility and even lender choice can have a bigger impact on your overall position than chasing a marginally lower rate.

If you are looking to buy
Rate moves shift borrowing capacity. As a rough guide, each 0.25% rise reduces what you can borrow by $10k-$15k per $100k of income.
For example, on a $120k household income, that’s an approximate drop of $12k-$18k in how much you can borrow. These are indicative figures and will differ by lender.

If you have a pre-approval that’s a few months old, please check in with your broker before making offers. If you don’t have one yet, it’s worth getting:
• You’ll know your real budget, not a rough estimate
• You can move quickly when the right property appears
• You can narrow your property search and avoid time wastage
And, if you are waiting for ‘perfect timing’, you need to weigh up the impact future increased rates will have on your purchasing power.

If you are looking to sell
If selling and buying in the same market, your borrowing capacity and your target sale price are directly linked. Knowing your borrowing options helps you understand the pathway into your next home and the price you need to achieve, so you can negotiate with confidence.

If you are an investor
Cash flow is under more pressure, so it’s worth a fresh look at your portfolio. The right lender and loan structure matters even more in a higher-rate environment, and this is exactly the kind of market where a strategic finance review pays for itself. One thing to avoid!

Timing is important BUT don’t make rushed decisions based on headlines. Chasing small rate differences with loan or lender switches doesn’t always make sense. Refinancing costs could outweigh the savings. Clear goals and an aligned funding strategy are where the real gains are.