In short: A 0.25 percentage point rise on a 30-year principal-and-interest loan adds about $16 a month for every $100,000 borrowed at current rates. On a $600,000 loan that is $97 a month; on $1 million it is $162. A full percentage point is roughly four times that. Lenders already test you at your rate plus 3 points, but your own budget should be checked at least one point higher than today.
Key takeaways
- At 6.00% p.a. a 0.25 point rise costs roughly $16 per $100,000 per month on a 30-year loan.
- The dollar impact grows slightly at higher rates because more of each repayment is interest.
- A lender's serviceability test at rate plus 3 points is a legal floor for approval, not a guarantee of comfort.
- Two or three rises in a year on a $700,000 loan add over $340 a month; plan for that before the first one.
- Fixed rates, offsets and refinancing are the three practical responses, and each suits a different household.
The RBA cash rate sits at 4.35% after the August hold, and the board's next decision is due today, 29 September 2026. Whichever way it goes, the useful thing is not the prediction but the arithmetic. This post gives you the numbers for the loan sizes we see most in Melbourne's north and shows how to stress-test your own position in five minutes.
The tables
All figures are principal and interest over 30 years, for illustration at a starting rate of 6.00% p.a. Your rate will differ; the proportions will not.
One rise of 0.25 percentage points
| Loan | At 6.00% | At 6.25% | Extra per month | Extra per year |
|---|---|---|---|---|
| $400,000 | $2,398 | $2,463 | $65 | $780 |
| $500,000 | $2,998 | $3,079 | $81 | $972 |
| $600,000 | $3,597 | $3,694 | $97 | $1,164 |
| $700,000 | $4,197 | $4,310 | $113 | $1,356 |
| $800,000 | $4,796 | $4,926 | $129 | $1,548 |
| $900,000 | $5,396 | $5,541 | $146 | $1,752 |
| $1,000,000 | $5,996 | $6,157 | $162 | $1,944 |
Two rises (0.50 points) and four rises (1.00 point)
| Loan | At 6.50% | Extra vs 6.00% | At 7.00% | Extra vs 6.00% |
|---|---|---|---|---|
| $400,000 | $2,528 | $130 | $2,661 | $263 |
| $500,000 | $3,160 | $162 | $3,327 | $329 |
| $600,000 | $3,792 | $195 | $3,992 | $395 |
| $700,000 | $4,424 | $227 | $4,657 | $460 |
| $800,000 | $5,057 | $261 | $5,322 | $526 |
| $900,000 | $5,689 | $293 | $5,988 | $592 |
| $1,000,000 | $6,321 | $325 | $6,653 | $658 |
Get the exact figure for your own loan and rate from the mortgage repayment calculator, and read our RBA cash rate guide for how a cash rate move flows through to your lender's variable rate.
Why the impact is smaller than people expect
A 0.25 point rise sounds like it should lift a $600,000 repayment by 0.25% of $600,000, or $1,500 a year. The actual figure is $1,164. The difference is the principal portion of your repayment, which does not change with the rate, and the fact that the loan amortises. Only the interest component moves. On an interest-only loan the full $1,500 applies, which is one reason interest-only borrowers feel rate moves harder.
How lenders stress-test you
Under APRA's serviceability rules, lenders assess whether you can repay at your actual rate plus 3 percentage points. For illustration, a $700,000 loan offered at 6.00% p.a. is tested at 9.00% p.a.:
| Actual | Assessed | |
|---|---|---|
| Rate | 6.00% p.a. | 9.00% p.a. |
| Monthly repayment | $4,197 | $5,632 |
| Buffer built into the approval | $1,435 a month |
This is why borrowers approved in the last few years have generally kept paying through rate rises: the approval already assumed something much worse than a few 0.25 point moves. It is also why a lender saying you can afford a loan tells you nothing about whether you will enjoy affording it.
Stress-test yourself in five minutes
- Write down your current repayment and your loan balance.
- Add $16 a month for every $100,000 of balance for each 0.25 point rise you want to test. For a $650,000 loan and two rises, that is about $210 a month.
- Compare the new figure with your monthly surplus after all expenses, using real bank statements rather than a guess.
- If the surplus disappears at two rises, act now: rates fall as well as rise, but a household with no margin has no time to wait.
- If the surplus survives four rises, you are in the position lenders assumed, and your task is simply to keep the buffer.
For a family in Epping with a $650,000 loan and $600 a month of surplus, two rises leave $390, four rises leave $170. That is survivable but thin, and it is exactly the household that benefits from a partial fix or an offset buffer.
Three responses, and who each suits
Fix part of the loan
Fixing gives certainty on the fixed portion for the term. A split loan with, say, 60% fixed and 40% variable caps most of the risk while keeping an offset and extra repayments on the variable part. Fixing suits households with thin surplus who need to know their number. It does not suit anyone likely to sell or refinance inside the term, because break costs can be substantial. Our fixed vs variable guide works through the choice.
Build an offset buffer
Money in a 100% offset reduces the balance interest is charged on, so it softens every rise automatically. $30,000 offset against a $600,000 loan at 6.25% p.a. saves about $156 a month, more than one 0.25 point rise. It suits households with surplus who value flexibility over certainty. See the offset calculator.
Refinance to a sharper rate
If your rate is well above what new customers are offered, a refinance can absorb several rises in one move. A 0.50 point improvement on $700,000 is worth $227 a month, the same as two RBA rises in the other direction. Our refinance calculator shows the break-even after costs, and our refinancing service handles the switch. Independent rate and budgeting tools are also available at Moneysmart.
If a rise has already hurt
Contact your lender or broker before you miss a repayment, not after. Hardship variations, a temporary switch to interest-only, or a term extension are all available, and lenders are obliged to consider a hardship notice. Our mortgage stress guide and financial hardship rights page explain your options. The RBA's own site publishes each decision and the reasoning behind it, which is worth reading over any headline.
Frequently asked questions
Does my lender have to pass on an RBA rate change in full?
No. Lenders set their own variable rates and often move by more or less than the cash rate, or with a delay. Over time most variable rates track the cash rate closely, but the timing and size of each change is a commercial decision. If your lender consistently moves faster on the way up than on the way down, that is a reason to refinance.
Will a 0.25 point rise change my repayment immediately?
Usually within a few weeks. Your lender must give you notice of a rate change on a variable loan, and the new repayment applies from the next cycle after the effective date. Fixed-rate borrowers see no change until the fixed term ends, at which point the loan reverts to the variable rate of the day.
Should I fix now in case rates go up again?
Fixing is insurance, not a bet. If your budget cannot absorb two or three rises, fixing part of the loan buys certainty regardless of what rates then do. If your budget can absorb them comfortably, the value of fixing is lower and the loss of flexibility may cost more than it saves. Decide based on your surplus, not on forecasts.
Talk to GNT Finance
Gorakh Timilsina will stress-test your loan at today's rate and at one, two and four rises, then show you what a split, an offset or a refinance would do to each scenario. There is no cost to you for our home-loan service in most cases. Book a free consultation or call 0426 403 703.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.