Five rate rises in a single year have quietly rewritten the numbers on Investment property. On a $1 million loan, monthly repayments are now estimated to be $737 higher than in January, and Tuesday's hike adds to the strain. For investors who bought established homes after the May 2026 budget, the squeeze has an extra edge: from July 2027, rental losses on those properties can no longer be offset against wages.

How much more borrowers are paying

The Reserve Bank lifted the cash rate by 25 basis points to 4.85% on 3 November, its fifth increase of 2026.

Finder's Richard Whitten estimated that repayments on the average $730,719 Loan are now up $538 a month, or $6,460 a year, since January.

On a $1 million loan, the increase is about $737 a month, or $8,840 a year. On a $500,000 loan, it is about $258 a month.

Industry estimates from early November tell a similar story. The estimates suggest each 0.25 point rise adds about $107 a month to a typical new $700,000 mortgage, and that five rises add about $537 a month, or roughly $6,450 a year.

The highest repayment burden in decades

The broader affordability measures are just as stark.

According to a REA Group estimate, repayments on a median-priced home would take 37.4% of a typical household's income after a hike. That is the highest share since the late 1980s.

Investors have felt the change in a different way. Herron Todd White's Gavin Hulcombe said that this year's rate rises lifted investor borrowing costs by about 20%, even though the cash rate rose only about one percentage point.

Challenger's Jonathan Kearns said that widespread Mortgage defaults are unlikely while Unemployment stays low and most borrowers have equity, with Job loss the main trigger.

Household sentiment reflects the pressure. ANZ-Roy Morgan consumer confidence fell 1.7 points to 66.2, its lowest since late May.

Why July 2027 changes the equation

Under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, negative gearing is limited to new builds for properties bought after 7:30pm AEST on 12 May 2026, with the limit applying from 1 July 2027.

In practice, that means rental losses on an established property bought after the cut-off cannot be used to reduce tax on wage or salary income from 1 July 2027. Properties held before the cut-off are grandfathered, and new builds remain eligible.

The distinction matters because negative gearing effectively shares part of a rental loss with the tax system. When rising interest pushes a property further into loss, a grandfathered investor can claim that loss against other income. A post-budget buyer of an established property will not be able to do so from 2027.

The detail is still being finalised. The Tax Reform No. 3 Bill, now before the Senate, defines a "new residential dwelling" and sets out negative gearing exemptions for purposes including affordable and public housing, according to the Treasurer's second reading speech.

The exact mechanics of how affected losses are treated are set out in the legislation,.

Hypothetical example: the same rate rise, two tax outcomes

Hypothetical example: Two investors each carry a $1 million interest-only investment loan, and each faces the estimated $8,840 a year increase in repayments since January. Both properties were already running at a loss before the rate rises, and both investors earn Taxable Income in the 37% bracket and pay the 2% Medicare levy, a combined marginal rate of 39%.

Investor A bought an established unit in 2024, so it is grandfathered. The extra $8,840 in interest increases a rental loss that can be offset against salary. At 39%, that reduces tax by about $3,448, leaving an after-tax cost of about $5,392 a year.

Investor B bought a similar established unit in June 2026, after the budget cut-off. Until 30 June 2027, the existing rules apply. From 1 July 2027, the larger rental loss cannot be set against wages, so on these assumptions the full $8,840 is felt without that offset in the year it is paid.

This is a simplified illustration. It assumes the full repayment increase is deductible interest and ignores rent changes, depreciation, offset accounts and lender timing. The repayment estimate covers standard loans, which also include principal for most borrowers.

Rates may not fall soon

The bank forecasts offer little near-term comfort. CBA expects the cash rate to hold at 4.85% before cuts in August and November 2027.

ANZ sees a "material risk" the cash rate reaches 5.10% in December or February, and Westpac says the risk of a February rise is increasing.

The RBA gave no hint of an imminent pause, saying "a further tightening in financial conditions is warranted" and that it will do what it considers necessary to bring Inflation back to target.

The RBA itself said inflation is not expected to reach the top of its 2–3% target range until late 2027. Its statement said higher rates and falling housing prices and turnover are expected to weigh on dwelling investment and household consumption.

Timing also matters for household budgets. Some borrowers' repayment increases from Tuesday's hike won't take effect until December. At the time of writing, no lender had announced how or when it would pass the rise on.

Key dates to watch

  • 4 November: the RBA releases its Chart Pack.
  • 5–6 November: Senate committee hearings on the Tax Reform No. 3 Bill, which defines a "new residential dwelling" for negative gearing purposes. The report is due 13 November.
  • 25 November: the next monthly CPI figures.
  • December: lender repayment changes flow through for some borrowers, and the federal government releases its mid-year budget update.
  • 1 July 2027: the negative gearing limit and new CGT settings commence.