What a 50bp Hike Does to a $750,000 Loan

Key takeaways

• Roughly $32 per month per $100,000 per 50 basis points, near 6%.
• The effect scales linearly with loan size.
• It also cuts borrowing capacity for anyone still buying.
• Interest-only borrowers feel the full move immediately with no principal cushion.

What is the actual number?

Illustrative, 30-year term, principal and interest, moving from 6.00% to 6.50%.

Substitute your own rate and balance - the figures shift with the starting rate and remaining term, but the proportionality holds. Note that the increase is larger at a longer remaining term, because more of the payment is interest.

What does it do to borrowing power?

More than it does to an existing repayment, because of the serviceability buffer. Lenders assess at a rate at least 3.0 percentage points above the product rate, so a 50 basis point increase in the product rate lifts the assessment rate too.

The effect compounds: the borrower's maximum loan is calculated at a higher rate, and every dollar of the loan costs more at that rate. A 50 basis point move typically reduces maximum borrowing capacity by a meaningful percentage, which for a buyer in the market translates into a lower price ceiling.

This is the transmission channel people underestimate. A rate rise does not only make existing mortgages more expensive - it removes buyers from the market and lowers what the remaining ones can bid.

Who is most exposed?

• Recent borrowers at high LVR - the largest balances relative to income, and no equity buffer.
• Interest-only borrowers - the full rate move hits, with no principal reduction cushioning it, and an eventual step-up to principal and interest still ahead.
• Borrowers rolling off a fixed rate - who take the accumulated move all at once rather than incrementally.
• Investors - who typically pay a higher base rate and often hold multiple loans, so the dollar effect multiplies.
• Households already in mortgage stress - 421,725 households across 80 postcodes as at June 2026, for whom there is no discretionary spending left to cut.

If a 50 basis point move would be difficult, act before it happens rather than after: build a buffer in offset, request a reprice, and if the position is genuinely tight, talk to your lender's hardship team early. Restructuring before arrears is far easier than after.

Frequently asked questions

How much does a 0.5% rate rise cost per month?

Approximately $32 per month for every $100,000 borrowed, at rates around 6% over a 30-year term. On $750,000 that is about $244 a month, or roughly $2,928 a year.

Why is my increase different from the table?

Because the figures depend on your actual rate, remaining term and balance. A shorter remaining term means a smaller dollar increase, and a higher starting rate changes the proportion slightly.

Does a rate rise affect how much I can borrow?

Yes, and generally by more than it affects an existing repayment. Lenders assess at a rate at least 3.0 percentage points above the product rate, so the assessment rate rises too and maximum borrowing capacity falls.

What should I do if I cannot absorb another rise?

Act before arrears. Request a reprice from your lender, review whether the loan structure still suits you, and contact the hardship team early - lenders have far more options available before a payment is missed than after.

Related reading

• How a 0.25% Rate Rise Changes Repayments, by Loan Size
• Stress-Testing Your Own Budget at +3%
• Mortgage Stress Hits 421,725 Households: Is Your Postcode on the List?

Sources

• Statistical tables - lending rates — Reserve Bank of Australia
• Prudential Practice Guide APG 223 Residential Mortgage Lending — APRA