Highlights

  • A hypothetical $550,000 30-year mortgage at 5.75% carries monthly repayments of $3,209.65 at full pass-through.
  • Each 25 basis point step adds approximately $88 to $90 per month to the hypothetical monthly repayment.
  • Three steps from 5.75% to 6.50% add $266.72 per month in total, reaching $3,476.37 under these assumptions.
  • These are illustrative figures assuming full pass-through; actual repayments depend on a lender's individual rate decisions.

Each 25 basis point increase in the cash rate that is fully passed through by a lender adds roughly $88-90 per month to the repayments on a $550,000 mortgage over 30 years. Three steps add around $267 in total. These figures are a hypothetical illustration of the arithmetic, not actual lender rates or RBA forecasts.

The Illustration and Its Assumptions

The following figures are a hypothetical illustration by this publication only. They assume a loan of $550,000, a 30-year term, principal and interest repayments, and full pass-through of each 25 basis point rate change. They are not actual lender rates, not RBA projections, and do not reflect any individual borrower's circumstances.

At 5.75%, the monthly repayment on this hypothetical loan would be $3,209.65. At 6.00%, it rises to $3,297.53, an increase of $87.88. At 6.25%, it reaches $3,386.44, adding another $88.91. At 6.50%, the monthly figure is $3,476.37, a further $89.93 more. The cumulative addition across all three steps is $266.72 per month.

Why the Increment Is Not Perfectly Uniform

The amount added by each 25 basis point step is not identical because the interest calculation compounds on the outstanding balance, which changes slightly at each point. At 5.75% the dollar impact of 25 basis points differs slightly from the impact at 6.25%, producing the small variation in the figures above.

For a borrower who has been with the same loan for several years, the outstanding balance will have fallen through amortisation, which means the dollar impact of each rate step on that loan would be smaller than these illustrative figures suggest. These numbers assume the full original balance.

What This Means in Context

The RBA's September 2026 minutes showed scheduled mortgage payments were near 10% of aggregate household disposable income. Each further rate rise that is fully passed through adds to that burden. For individual households, the actual impact depends on the loan balance, term, lender pass-through, whether the rate is fixed or variable, and offset account balances.

The RBA has stated that fewer than 2% of owner-occupier borrowers were estimated to be in a cash flow shortfall at the time of the September Board meeting, based on data presented to the Board.