The maximum amount people can borrow from the bank is set to take yet another haircut, if the RBA hikes the cash rate for the third time in a row on Tuesday.
Canstar analysis shows someone earning the average full-time wage of $106,950 will be able to borrow an estimated $11,700 less if an RBA rate rise materialises on Tuesday.
This is based on a person taking out an owner-occupier loan with no other debts, no dependents, and minimum expenses. Note: borrowing capacity figures are estimates and can vary from lender-to-lender.
Estimated decrease | ||
|---|---|---|
Borrower | Hike in | Cumulative |
Individual | -$11,700 | -$36,500 |
Couple | -$23,500 | -$73,100 |
Source: Canstar. Based on an owner-occupier taking out a 30-year loan at the average RBA rate. Assumes minimal expenses, no debts, no dependents, average wage based on ABS data. See full notes below.
While all four big bank economic teams expect a hike on Tuesday, Westpac does not expect the cash rate hikes to stop there, with two further 0.25 percentage hikes in June and August forecast.
If this eventuates, and there are a total of five cash rate hikes by August 2026, then that same person’s borrowing capacity could shrink by around $58,700 in total – wiping out 10% of their buying budget since the start of the year.
Estimated decrease | |
|---|---|
Individual | |
February | -$12,600 |
March | -$12,200 |
May | -$11,700 |
June | -$11,300 |
Aug | -$10,900 |
TOTAL | -$58,700 |
Source: Canstar.com.au. Based on an owner-occupier taking out a 30-year loan at the average RBA rate. Assumes minimal expenses, no debts, no dependents, average wage based on ABS data. RBA rate hikes are in line with Westpac’s cash rate forecast. See full notes below.
Rate hikes impact house prices, but not equally across the country
While higher interest rates are steadily eroding borrowing power, the impact on home prices is proving uneven.
Latest figures from Cotality show dwelling values in Sydney and Melbourne have already fallen by 0.7% and 1.7% respectively so far this year.
Notably, that puts both cities in line with ANZ’s full-year forecasts for 2026, having realised those declines just four months into the year.
In contrast, prices in other capitals are still running hot, but haven't yet caught up to forecast levels.
Values in Brisbane are up 6.4% year-to-date in the space of four months, according to Cotality data, and look set to climb even further with ANZ expecting a 9.7% rise across 2026.
Perth prices have surged 9.2% so far this year, with ANZ expecting total growth for the year to hit 12.3%
| Cotality | ANZ forecast |
|---|---|---|
Sydney | -0.7% | -0.7% |
Melbourne | -1.7% | -1.7% |
Brisbane | +6.4% | +9.7% |
Adelaide | +4.7% | +5.7% |
Perth | +9.2% | +12.3% |
Hobart | +3.0% | +3.7% |
Canberra | +0.6% | +1.6% |
Darwin | +4.6% | +8.0% |
Source: ANZ housing price growth forecast, released 9 April 2026. Cotality Home Value Index released 1 May 2026.
Impacts on buyer sentiment
Canstar's Data Insights Director, Sally Tindall, says, “The rate hikes in February and March have taken a serious bite out of the home buying budgets for those borrowing at capacity and there could be more pain to come as early as Tuesday.”
“If the RBA fires off a third successive hike, Canstar estimates the average Australian would see their maximum home buying budget shrink by almost $12,000. In total, across the year the hit would tally up to over $36,000. For a couple, the damage could be double.
“The housing market hasn’t reacted evenly to the rate hikes. In Sydney, prices might have cooled but the rate hikes have pushed many home buying budgets down by more.
“Buyer sentiment is also likely to be having an impact, with uncertainty around how high rates and other cost-of-living pressures will go.
“By contrast, Brisbane and Perth are still powering ahead on the back of a lack of supply. Prices clearly still haven’t hit enough home buyers’ ceilings yet, but at this pace, it’s only a matter of time before they do.”
Borrowing power notes: Based on someone taking out a 30-year owner-occupier loan at the average new customer variable rate (RBA). Assumes $24k p.a. of expenses for one individual with no debts and no dependents. Income is based on the ABS weekly ordinary time full-time earnings in original terms. Does not factor in wages growth. Borrowing power based on 90% of post-tax income available to service the loan and expenses, and a 3.00% interest rate buffer. Tax calculations based on the current financial year, excluding Medicare Levy. Borrowers should seek personal financial advice before deciding how much to borrow and know the actual amount will vary depending on their personal circumstances and between lenders.
