Key Highlights

  • A $350,000 Mortgage faces about $57 more each month after a hypothetical quarter-point rise.
  • It is the smallest of the three Loan sizes used in the illustrations.
  • The Financial Stability Review found the median borrower can cover over a year of scheduled repayments from savings.
  • The Review estimated that less than 1% of borrowers were in negative equity.

A smaller mortgage softens the dollar impact of a quarter-point rise, but a hypothetical $350,000 example shows the change still lands alongside other pressures on the household budget.

About $57 a month. That is the extra repayment in this illustration of a $350,000 mortgage after a hypothetical quarter-point rise in its interest rate.

The figures here are illustrative. The interest rates are hypothetical assumptions rather than quoted lender rates, and actual lender pass-through varies.

The illustration in brief

The assumptions are:

  • Loan: $350,000, 30-year term, principal and interest.
  • Hypothetical rate before: 6.10 per cent.
  • Hypothetical rate after: 6.35 per cent, a rise of 0.25 percentage points.

On that basis, monthly repayments would move from about $2,121 to about $2,178, an increase of about $57. Across a year, that is roughly $684.

The 0.25 percentage point step mirrors the size of the change in the cash rate target, which the Monetary Policy Board raised by 25 basis points to 4.85 per cent on 3 November 2026. It does not follow that every borrower's rate moved by exactly that amount; that depends on the lender and the loan.

Smaller loan, same proportion

The same hypothetical rate change applied to larger loans gives about $89 more a month on $550,000 and about $146 more on $900,000. The $350,000 borrower's dollar increase is smaller simply because there is less Debt on which interest is charged.

In proportional terms, though, the change is broadly the same across all three examples: a little under 3 per cent of the monthly repayment. That is the point captured in the headline. A smaller loan cushions the dollar amount, but it does not exempt the borrower from the direction of travel.

Who holds a loan of this size varies. It could be a borrower who bought some time ago and has paid down much of the balance, a buyer in a lower-priced market, or a household that borrowed modestly relative to income. The illustration makes no assumption about which, and the impact on each would differ.

The rest of the household budget

A mortgage repayment is only one line in a household budget, and the November decision came against a backdrop of elevated prices more generally. The Inflation figures are worth setting out carefully, because three different numbers are in circulation:

  • The monthly CPI indicator showed headline annual inflation of 4.3 per cent in the September month.
  • Quarterly headline CPI was 3.9 per cent over the year to the September quarter.
  • Trimmed mean (underlying) inflation was 3.7 per cent over the year to the September quarter.

The RBA expects headline inflation to rise further before easing. Its November Statement on Monetary Policy says "Headline inflation is expected to peak at 4.5 per cent in the December 2026 quarter", with both headline and trimmed mean measures "expected to remain above 3 per cent until end-2027".

Fuel is a significant part of the story. The Statement's Outlook chapter notes that "The assumed oil price in the December quarter is 35 per cent higher than assumed in August". Governor Michele Bullock was explicit that this was not the direct reason for the rise: "we are not tightening monetary policy because of the direct impact of oil prices on inflation." Rather, she said, "It is critical that we stop expectations for high inflation from becoming embedded in price-setting decisions".

How borrowers were placed going in

The RBA's October 2026 Financial Stability Review provides a system-wide view of mortgage resilience, though its findings predate the November rise. It reported that the share of variable-rate owner-occupier borrowers with a cash-flow shortfall "increased a little over the first half of 2026, but remains relatively low at around 2 per cent."

The median borrower can cover "over a year of scheduled mortgage payments at current interest rates" from their buffers, according to the Review, and "less than 1 per cent of borrowers" were estimated to be in negative equity. It judged that "Most borrowers appear well placed to manage ongoing cost pressures amid declining housing prices."

Employment is the other pillar of household resilience. The Statement noted that "employment growth held up in the September quarter as expected", even though "The Unemployment rate rose by more than expected to average 4.6 per cent in the September quarter." The RBA attributed that rise largely to higher-than-expected labour supply. It forecasts unemployment "to rise to a bit over 5 per cent by end-2028."

What the illustration does not tell you

This example isolates a single quarter-point step on assumed rates. It does not forecast where lending rates will go. The Statement's forecasts rest on a market-based cash rate assumption, as at 28 October, that "increases by 35 basis points by mid-2027, before declining a little to stabilise at 4.8 per cent in 2028." That path reflects market pricing at the time, not a commitment from the Board.

The Board's own forward guidance is general: it "will continue to do what it considers necessary to bring inflation sustainably back to target." The vote in November was six to three, with three members preferring to hold at 4.60 per cent. The next scheduled decision is at 2.30 pm on 8 December 2026.

The bottom line

In this illustration, a hypothetical rise from 6.10 to 6.35 per cent adds about $57 a month to a $350,000, 30-year loan, or roughly $684 a year. That is a smaller dollar amount than for larger loans, but a similar proportional change, and it arrives at a time when headline inflation is forecast to peak at 4.5 per cent in the December quarter. Governor Bullock's framing — "Some pain now will prevent even worse pain down the track" — applies across loan sizes, even if the dollar amounts differ.