This was a largely expected rate hike. With the ongoing conflict in the Middle East and continued concern around inflation, the RBA has passed on a third 25 basis point increase in an 8-1 split.
For many households, this third hike is the one that really stings. Combined with the two before it, and layered on top of higher energy bills, insurance, and everyday costs, the pressure is real. We’re hearing it in a lot of our client conversations right now.
How does this impact your repayments?
For an owner-occupier on a variable rate P&I loan, here is what today’s hike, and this year’s three increases combined, means in practical terms. Estimates are based on a 30-year loan term.
| Loan Balance | Today’s Hike (+0.25%) | Cumulative This Year (+0.75%) |
|---|---|---|
| $500,000 | +$75 / month | +$215 / month |
| $750,000 | +$112 / month | +$325 / month |
| $1,000,000 | +$150 / month | +$430 / month |
Estimates only. Actual changes depend on your loan balance, remaining term, and when your lender formally reprices.
What about borrowing power?
Every rate rise also reduces how much new buyers can borrow. Here is a rough guide based on this year’s 0.75% total increase:
| Previous Borrowing Capacity | Reduction Today (+0.25%) | Total Reduction This Year (+0.75%) |
|---|---|---|
| $500,000 | ~$13,000 | ~$35,000 |
| $750,000 | ~$20,000 | ~$53,000 |
| $1,000,000 | ~$26,000 | ~$70,000 |
Estimates only. Actual capacity will vary by lender and individual circumstances.
How we’re helping our clients
Rate rises are uncomfortable, but they are often a good reason to stop, reassess, and restructure. Here are six things we are actively working through with clients right now.
1. Review your interest rate
If you haven’t had your rate reviewed in the last six months, now is the time. We take three steps: reprice the current loan, check for internal refinance pricing, and then check against the market. We then present the most financially sound option.
Real example: We recently completed an internal refinance for a client with two investment properties. Their variable rate had drifted to 6.29%. After reviewing their position and engaging with their lender, we got both loans repriced down to 6.06%, freeing up $260 per month in repayments. No new lender, minimal disruption. Just advocacy on their behalf.
2. Consolidate personal debt
Credit cards and personal loans carry interest rates that are dramatically higher than your home loan. If cash flow is tight, consolidating these into your mortgage can provide real relief, though it is important to understand the trade-offs before acting.
Real example: A client came to us with a personal loan taken out over the holidays, costing 10% interest, more than double what their home loan was costing. We consolidated it into their mortgage at 5.8%, immediately freeing up $300 per month in repayments.
Note: consolidating short-term debt into a long-term loan can increase total interest paid over time unless you keep making extra repayments. We always model both scenarios so you can make an informed decision.
3. Access equity to build a buffer
Many clients are sitting on equity they haven’t tapped. Using a modest cash out to build a three to six month repayment buffer can significantly reduce financial stress if rates continue to rise.
Real example: During the last rate increase, we completed a refinance that included a $10,000 cash out. The rate movement was only marginal at 6 basis points, but the client walked away with a buffer in their offset account and their repayments completely unchanged. No extended term. The peace of mind alone made it worthwhile.
4. Restructure: consider interest only or a longer term
We all want to own our homes outright as quickly as possible. But if repayments are genuinely unaffordable right now, it is better to restructure strategically than to fall behind.
Switching to interest only temporarily, or extending your loan term, can reduce monthly commitments meaningfully. If your loan is variable, you can still make additional repayments whenever cash flow allows, keeping your original payoff trajectory intact without the pressure.
The key point: This does not have to be permanent. Think of it as a pressure valve, used strategically while rates are elevated, then wound back when conditions improve. We can model exactly what a 12-month interest only period costs you in additional interest versus the stress of overstretched repayments.
5. Get a finance review: a fresh set of eyes
Sometimes the most valuable thing is not about the mortgage at all. It is about getting clear on where your money is actually going.
Real example: We sat down with a client who felt like money was disappearing without being able to pinpoint where. We went through three months of bank statements together, categorised their spending, and laid it out in a simple format. The numbers told a clear story. Once they could see it visually, it was easy to take action. They left the meeting with a plan rather than a feeling of dread.
If you’d like us to do the same for you, just reach out. No judgment, no pressure, just clarity.
6. Fixed vs variable: know your threshold
The question of whether to fix is not just about predicting where rates are heading. It is about understanding your own risk tolerance and what you can actually afford.
The most useful way to think about it: if rates keep rising, at what point would it become genuinely unaffordable for your household? If there is a fixed rate available below that threshold, securing it now may well be the right call, even if you give up some upside if rates eventually fall.
Current landscape: Variable rates are currently sitting below fixed for most loan types, so fixing today means paying a little more right now. The question is what comes next. If the RBA moves again, that gap closes fast, and locking in at 6.14% could look very smart if variable rates push past 6.50%. The real question we work through with clients is simple: at what point does variable become unaffordable, and is there a fixed rate available below that point?
What rates are available right now?
Not all lenders will have formally repriced yet. Changes typically flow through within one to two business days of the RBA decision. The following guide is based on estimated post-RBA pricing for a loan of approximately $1M at 80% LVR.
Variable rate guide: May 2026
| Loan Type | Excellent | Good | Average | Poor |
|---|---|---|---|---|
| OO | P&I | Below 6.00% | 6.00% – 6.24% | 6.25% – 6.49% | 6.50%+ |
| INV | P&I | Below 6.20% | 6.20% – 6.39% | 6.40% – 6.59% | 6.60%+ |
| INV | IO | Below 6.35% | 6.35% – 6.59% | 6.60% – 6.84% | 6.85%+ |
| SMSF | P&I | Below 7.00% | 7.00% – 7.24% | 7.25% – 7.74% | 7.75%+ |
| SMSF | IO | Below 7.25% | 7.25% – 7.49% | 7.50% – 7.99% | 8.00%+ |
Estimated only, based on pre-RBA rates + 0.25%. If your current variable rate falls in the orange or red band for your loan type, it is worth a conversation.
Fixed rate guide: May 2026
| Term | OO P&I | INV P&I | INV IO |
|---|---|---|---|
| 1 Year Fixed | 6.14% | 6.24% | 6.29% |
| 2 Year Fixed | 6.14% | 6.24% | 6.24% |
Fixed rates are for the initial fixed term only. Revert rates apply after the fixed period ends. Contact us for a full scenario.
Want to know where you stand?
We’re here to help, not just when things are good, but especially when they’re not.
Whether you want to review your rate, understand your options, or just have someone run the numbers, reach out for a no-obligation conversation.
Jack Chen, Principal Mortgage Broker jack.chen@trimark.com.au | 0433 993 682 | trimark.com.au
General information only. Not financial advice. Speak with your adviser for personalised guidance.