RBA Rate Rise: How Much Extra Will Your Mortgage Cost?

This article is general information only and does not constitute financial or tax advice. Consult a qualified tax professional for advice specific to your situation.

When the RBA moves the cash rate, most variable rate mortgage holders feel it within weeks. Your lender passes the change through, your repayments go up, and you are left wondering exactly how much extra that costs you each month, and over the year.

Even a small rate change adds up fast, especially on larger loan balances. A 0.25% rise on a $500,000 loan with 25 years remaining adds roughly $80 per month to your repayments. That is close to $960 per year. Money that was not in your budget yesterday.

For investment property owners, the maths matters even more. Higher interest means higher tax-deductible expenses, but it also means tighter cash flow. Knowing the exact number helps you plan, whether that means adjusting rents, reviewing your loan structure, or just having a clear picture of where you stand.

What Does a 0.25% Rise Actually Cost You?

The impact depends on three things: your current interest rate, your outstanding loan balance, and how many years you have left on the loan.

On a typical $500,000 variable rate mortgage at 6.00% with 25 years remaining, your current monthly repayment sits at around $3,222. A 0.25% increase pushes that to roughly $3,300, an extra $78 per month.

That might not sound dramatic on its own, but over a full year it is $936. Hold two investment properties with similar loan balances and you are looking at close to $2,000 per year in additional interest costs.

A larger loan balance amplifies the impact. A shorter remaining term reduces it slightly because more of each repayment is going to principal rather than interest. The only way to know your exact figure is to plug in your own numbers.

Calculate Your Increase

Enter your current rate, loan amount, and remaining term below to see the impact on your repayments.

The calculator works for any rate change, not just a 0.25% rise. Adjust the rate change field to model different scenarios: a 0.50% increase, a future cut, or what happens if you refinance to a lower rate with a different lender.

What Can You Do About It?

A rate rise is not something you can avoid, but there are practical steps worth taking when one hits.

Review your rate with your lender. Banks do not always pass on cuts as quickly as they pass on rises, and loyalty rarely gets you the best deal. Call and ask for their best variable rate for existing customers. If they cannot match what new borrowers get, it may be time to look elsewhere.

Consider an offset account. Every dollar sitting in an offset account is a dollar you are not paying interest on. For landlords with multiple properties, structuring your offset against the right loan (usually the non-deductible one, if you also have an owner-occupied property) makes a real difference. If your property is negatively geared, higher interest costs increase the deductible loss, but that only helps if your cash flow can sustain the gap.

Look at fixing a portion. If your variable rate is becoming uncomfortable, a split loan (part fixed, part variable) gives you some protection against further rises while keeping the option to make extra repayments on the variable portion.

Track the higher interest for tax time. For investment property owners, the increase in mortgage interest is tax-deductible. It does not eliminate the cash flow hit, but it softens it. Make sure you are recording the higher repayments so your deduction claim at EOFY reflects the actual amount paid.

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