-- The Reserve Bank's latest interest rate increase will put further pressure on borrowers whose lenders pass it on, but Commonwealth Bank's forecast offers a reason for cautious optimism about eventual relief.
On 3 November, the RBA increased the cash rate by 0.25 percentage points to 4.85%. The Board said inflation remained too high and was expected to stay above 3% over the coming year.
Hunter Galloway Director and Mortgage Broker Jayden Vecchio said the immediate priority for borrowers was understanding what another increase could mean for their household budget. "For a family already watching every dollar, another increase means less room for groceries, bills and savings.
"The first step is to check whether your lender is changing your rate, when that takes effect and what your new repayment will be."
For illustration, a borrower with a $600,000 principal-and-interest loan and 30 years remaining would pay approximately $99 more each month if their mortgage rate rose from 6.50% to 6.75%. Under the same assumptions, the increase would be approximately $124 on a $750,000 loan or $165 on a $1 million loan.
Actual changes depend on the lender, loan balance, interest rate and remaining term. Fixed-rate repayments generally remain unchanged during the fixed period.
A Possible Silver Lining
Following the decision, Commonwealth Bank economists forecast the RBA would hold rates before making two 0.25 percentage point cuts in August and November 2027. However, the bank warned that another increase in 2027 remained possible and the timing of cuts was uncertain.
"There is a reason for cautious hope in CBA's forecast. Its central view is that the next move after a period on hold will be down," Mr Vecchio said.
"That may give borrowers some confidence that relief is possible further ahead. But August 2027 is still some way away, and a forecast can change. Households need a budget that works at today's repayments."
What Borrowers Can Do Now
Mr Vecchio encouraged borrowers to speak with their mortgage broker rather than wait for the RBA to deliver relief. "At Hunter Galloway, we regularly review our customers' rates and start by asking their existing lender for a better deal.
"If the lender won't come to the table, we can look at whether refinancing would leave them better off after fees and switching costs, while keeping an eye on the remaining loan term.
"If you secure a lower rate and can comfortably keep paying the same amount, more of each repayment can go towards the loan balance. That can help you pay down the loan faster, rather than simply reducing the monthly repayment.
"The starting point is a conversation with your broker about your current loan and what you want to achieve. You don't have to wait for a rate cut to find out whether there's a better option."
Borrowers should check any limits or costs on extra repayments. A lower monthly repayment can cost more overall if the debt is stretched over a longer term. If repayments are becoming difficult, contact the lender early about hardship assistance.
Prospective buyers should also confirm their borrowing capacity before making an offer and avoid relying on forecast rate cuts to make a purchase affordable.
Look Beyond The Home Loan
"Speak with your broker about any higher-interest personal loans, credit cards or car finance too," Mr Vecchio said.
"Where consolidation makes sense after costs, we can look at a separate home-loan split with repayments set to clear that debt within its original remaining timeframe or sooner. A separate split helps track it; the repayment amount and term determine how quickly it is paid off."
In a hypothetical example, a $30,000 personal loan at 12% with five years remaining costs about $667 a month. Refinancing it at an assumed 6.5% over the same five years reduces repayments to about $587 and interest by approximately $4,820 before costs.
Keeping repayments at about $667 instead clears the split in roughly four years and four months, about eight months sooner, saving approximately $5,570 in interest before costs.
"That gives you two different choices: more room in your monthly budget, or paying the debt off faster. The trap is turning five years of debt into 30."
Consolidation puts the home at risk if repayments cannot be met. Borrowers need to compare total costs, any impact on existing mortgage pricing, and affordability, and avoid building up new debt. Novated leases require a separate comparison of payout and residual amounts, running costs and tax treatment.
Illustration only, not a client case or loan offer. Assumes monthly principal-and-interest repayments, unchanged rates, no fees, no balloon and no further borrowing. Approval, costs and future rates affect actual outcomes.
About the company: Hunter Galloway Finance Pty Ltd is a Brisbane-based Australian mortgage brokerage. The company assists first-home buyers, property investors and existing homeowners with mortgage applications, refinancing and lender comparisons. Its services include guidance on home loan features and lending policies.
Contact Info:
Name: Jayden Vecchio
Email: Send Email
Organization: Hunter Galloway Finance Pty Ltd
Phone: 0481 615 063
Website: https://www.huntergalloway.com.au/
Release ID: 89207710
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