Get rate hike ready: how to counter higher mortgage repayments

The RBA has today increased the cash rate by 0.25 percentage points, the first hike since November 2023.

Our analysis shows that if passed on by the banks, as is expected, the increase will add around $90 to the monthly repayments of a typical $600,000 mortgage with 25 years remaining.

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Here’s what happens now for variable borrowers

Banks are expected to pass this hike on to their variable rate mortgage customers, typically within the next one to three weeks.

However, while the bank will start charging customers the higher mortgage rate from this time, they’ll give borrowers plenty of notice before they increase their minimum monthly repayment and associated direct debit.

In the case of an increase to customers’ minimum monthly repayments, the big four banks provide the following:

• CBA: a minimum of 20 days’ notice.
• Westpac: a minimum of 30 days’ notice.
• NAB: a minimum of 30 days’ notice.
• ANZ: a minimum of 30 days’ notice.

Exactly when a customer’s repayments will rise will also depend on how long it takes the banks to issue the repayment change letter and where the customer is in their billing cycle. This can take up two or three months in some cases.

How to get ahead of a rate hike

Variable rate borrowers don’t just have to accept a higher mortgage rate. These rates are negotiable.

The first port of call for borrowers should be to contact their bank and ask for a rate cut.

If a borrower can drop their rate by 0.25, then they will have effectively mitigated the impact of today’s hike. A personalised rate cut of 0.50 will mitigate the impact should there be a second hike.

What will a good rate now look like?

Once the dust settles on this hike, Canstar estimates:

• 5.77% will be the average owner-occupier variable rate.
• 5.50% will be a competitive owner-occupier variable rate, on offer from an estimated 40+ lenders.
• 5.24% is likely to be the lowest variable rate on Canstar.

What kind of buffer do Australians currently have?

Many borrowers are, in fact, ahead on their repayments, cushioning them against this rise, particularly those who did not adjust their mortgage repayments following the three cuts in 2025. Many of these borrowers might not see a rise to their mortgage repayments at all, although this will depend on their bank’s settings.

• NAB data shows 80% of its variable borrowers kept their monthly repayments the same after the three rate cuts in 2025, which saw them pay extra into their mortgage.
• CBA data also showed the vast majority of its variable borrowers kept their repayments the same after the cuts in February, May and August.
• RBA data shows Australians paid over $14 billion in excess mortgage payments in the September quarter of 2025. This was the highest level since September 2021.
• APRA data shows balances in offset accounts are at a new record high of $327 billion in the September quarter of 2025. This now represents 13.5% of all credit outstanding.

Borrowers urged to act early if repayments become difficult

Borrowers with a mortgage should understand what their minimum monthly repayment will rise to following this hike, and potentially one or two more.

If there is any risk of falling behind, borrowers should talk to their lender about what options they might have before missing a repayment.

First steps:

• Request a rate reduction.
• If this is not met by the lender, borrowers should explain their financial circumstances and explore support options to help manage repayments.

Options may include:

• Switching to pay interest-only instead of principal and interest temporarily.
• Part-payments for a set period of time.
• Extending the loan term.

These options can provide relief, but they all come with longer-term financial consequences. It’s important to weigh them up carefully and seek independent financial advice.

What about other financial support options?

There are a number of options available to provide support if you are struggling with your finances.

• National Debt Helpline: 1800 007 007
• Financial counselling services
• Centrelink hardship payments such as crisis and other help
• Early release of superannuation
• No-interest loans (NIL): Several providers offer loans to assist with covering the costs of essentials with no interest charges or fees, including Good Shepherd no interest loans, AusWise, Focus Connect, Dept of Social Services

Borrowers don’t have to take this RBA hike lying down

Canstar’s data insights director, Sally Tindall, says, “An RBA rate hike will hit everyone with a variable rate mortgage. The message here is – whatever you do, don’t do nothing.”

“Variable rate borrowers don’t have to take this RBA hike lying down. Pick up the phone to your bank today, and ask for a rate review. If you can knock 0.25 off your current mortgage rate, then you’ve effectively neutralised today’s hike.

“A half a percentage point reduction will protect you from another. And if your lender doesn’t play ball? Well, it could be time to switch.

“After this rate hike, the refinancing frenzy will kick off again and the more people in it, the more competitive the banks will get.

“For those on stretched budgets, sit down and work out what your repayments might rise to, not just after this hike but if we see another one or two. If this number doesn’t fit in your budget, it’s time to make changes so that it does.

“Banks are on standby to help borrowers in financial difficulty, but they can only do so if you reach out.

“Even temporary arrangements can give breathing room. Think of these support options as short-term scaffolding: they keep you steady while you get back on track, but you’ll want a plan to return to normal repayments.

“It’s also really important to seek out independent financial advice. The National Debt Helpline is a good starting point as they can put you in touch with a financial counsellor, free of charge.”