Horror Friday for home loans: rate rise locks in nearly $3k extra for 2027

The majority of Australia’s borrowers will now pay higher interest rates on their mortgage, as big four banks CBA, Westpac, NAB, and ANZ pass on the RBA’s latest 0.25 percentage point cash rate hike.

Following today’s changes, Westpac offers the most competitive variable rate among the major banks, at 6.49%.

Source: Canstar. Rates are for owner-occupiers paying principal & interest. LVR requirements apply. 

The big four aren’t the only banks passing on the full hike. So far, 44 lenders on the Canstar Rate Tracker have passed on last week’s RBA hike. 

While these banks will start charging mortgage customers the higher interest rate from today, most will give borrowers two or more months before increasing their monthly direct debit. 

This means many customers won’t pay the extra money until the New Year.

Borrowers may have to find almost $3k more in 2027 than they did in 2026

With the cash rate now at the highest level since 2008, and no prospect of cash rate cuts in the near future, variable mortgage customers may need to settle into a new norm of higher rates.

Canstar analysis shows that if the cash rate remained at this setting for 2027, a typical borrower with a $600,000 debt at the start of this year, would end up paying an estimated $2,738 more in monthly repayments in 2027, compared to 2026.

Source: Canstar. Notes: based on an owner-occupier at the start of the 2026 and 25 years remaining on the average variable rate. Does not factor in extra repayments or fees. Assumes rates remain on hold for the remainder of 2026 and 2027.

Who will struggle with a fifth rate hike? 

It’s a tale of two cities when it comes to borrowers, with APRA data showing money in offset accounts is at a near record high at $340.5 billion.

Yet, big four bank full-year results show between 12% and 15% of mortgage customers have no buffer in their loan.

Source: Big four bank full year results 2026, extra repayments include offset balances. 

What should borrowers who can’t afford the higher repayment do? 

Call your bank and ask for a “rate review”. A 10 minute phone call could bring you the relief you need.

If it doesn’t, call your bank back to discuss your options. This could mean switching to interest-only or making part payments. If you need to go into a hardship arrangement with your bank, understand the implications of this.

Get independent financial advice. Call the National Debt Helpline on 1800 007 007. This service will put you in touch with a financial counsellor for free.

Can customers apply for hardship before they miss a repayment? 

Yes. It is infinitely better to reach out to your bank before you miss a repayment. You will potentially avoid formally going into default, which is likely to mean fewer fees and less damage on your credit file.

Under the National Credit Code, you have a legal right to request a hardship variation from your lender. This isn’t charity, it is a formal arrangement designed to stop you from defaulting.

To access it, call your bank and say you need financial hardship support. The key word here is “hardship”. If you ask for it, even over the phone, legally they have to help you.

Once you apply, the bank must provide an answer in writing within 21 days.

Will a hardship arrangement impact your credit score? 

No. The credit reporting agencies are not allowed to factor this into your credit score.

Provided you stick to the revised repayments, your credit file will record that you’ve paid on time. However, the fact that you’re on a hardship plan will be noted next to this. This drops off your file 12 months after you come off the arrangement.

A default, on the other hand, can stay on your credit file for up to five years.

Canstar's Data Insights Director, Sally Tindall, says, “The rubber hits the road, once again, for millions of Australian mortgage holders, with all four major banks officially passing on the RBA’s latest hike in full.”

“That said, while the majors will start charging their variable rate customers that higher interest rate from today, they’re going to give you a lot more runway before automatically hiking your direct debit.

“If you’ve got a mortgage, stay on top of which rate hike you’re paying for and what’s still to come. The five hikes in relatively quick succession can make it confusing to know whether you’re actually up to hike number three, four or five.

“While the prospect of a further rate hike isn’t off the table yet, rate cuts could not be further from the RBA’s agenda, which means borrowers will have to settle into a new norm of higher rates.

“Five rate hikes in a year is enough to make any borrower feel like they’re on a financial treadmill, only the speed keeps going up.

“This means, even if the RBA doesn’t lift rates again, a typical borrower with a $600,000 debt may have to find an extra $2,738 in 2027 just to keep on top of their minimum repayments, compared to 2026.

“For someone with a $1 million debt, they’re looking at over $4,500 more. That’s a massive chunk of after-tax income to pull out of an already-stretched family budget

“If you’re worried about how you’re going to afford your repayments in 2027, pick up the phone to your bank today. 

“Start by asking for a rate review, but if your bank doesn’t budge and you are genuinely struggling, it could be time to start exploring hardship options, before you miss a repayment. 

“Just don’t do it alone. Make sure you get financial support, and the National Debt Helpline is a great resource to get you started.”