What happens to my home loan when interest rates rise?


Liron Nehmadi
Jun 24, 2016( 1 min read )

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.


Related FAQs

Lenders are likely to put variable rates up and down several times throughout the life of a loan. However, the discount provided as part of the sale should remain for the life of your loan. For example – if you are on a rate of 3.95% which includes a discount of 0.10% and your lender puts up their variable rate to 4.25% then you will be on 4.15%.

Unlike the low introductory “honeymoon rates” used by some lenders to attract new customers, the discounted rates at the Switch & Save Sale should not expire while you continue to hold that loan with them, unless you change products or refinance.

You must check this and confirm with the lender/product you are interested in.

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