The RBA lifted the cash rate to 4.6% today, up 0.25 percentage points from 4.35% — the fourth rise this year and the highest cash rate since 2011. If you took out a mortgage any time in the last 15 years, this is the highest rate environment you’ve dealt with. I’ve spent the last few hours on the phone with clients and my own team, and here’s the honest version of what this actually means, not the headline version.
What actually changes for existing borrowers
If you’re on a variable rate, your lender will pass this through in the coming weeks — for most people that’s roughly an extra $80-100 a month on a $500,000 loan, scaled up or down with your loan size. If you’re fixed, nothing changes until your fixed term ends, but it’s worth knowing what you’re rolling onto now rather than being surprised later. The one thing that doesn’t change tonight is your existing approved borrowing capacity — that was already tested against a buffer rate sitting above today’s new rate, which is exactly why that buffer exists.
What actually changes for new applications
This is the part that catches people out. A rate rise doesn’t just cost existing borrowers more — it reduces new borrowing capacity, because serviceability is assessed against the new higher rate plus the buffer on top. Someone who was pre-approved for a certain amount two months ago may find that number has genuinely shrunk when we re-run it today. If you’re mid-property-search, this is worth a real conversation now, not after you’ve made an offer.
What I’m telling my team tonight
Four rises in one year is enough that “it’s just one more rate rise” doesn’t land the way it used to — clients are tired, and the honest response is to acknowledge that rather than talk over it. What I’m asking my lenders to do in every call this week is straightforward: don’t lead with the number, lead with what it means for that specific person’s situation. A client three years into a loan with real equity built up is in a completely different position to someone who settled six months ago at the top of their capacity. Treating both conversations the same way is where trust breaks down.
For anyone genuinely stretched by tonight’s news, the practical options worth actually walking through — not just mentioning — are: extending the loan term to lower repayments (at the cost of more interest over time), switching to interest-only for a defined period if the lender allows it, or having a real conversation about consolidating other debt into the home loan rather than juggling multiple repayments at higher rates. None of these are free lunches, and I’d rather talk someone through the real trade-off than let them sit with the number alone.
If you’re worried about tonight’s rise
The single most useful thing you can do this week is ask your own lender or broker to actually re-run your numbers rather than guess. Four rises in a year feels different in aggregate than it does one at a time, and a real conversation about where you actually stand — not a generic rate-rise explainer — is worth more than anything I can write here. That’s the conversation I’m having with my own clients tonight, and it’s the one I’d want if I were on the other side of the desk.
