Back-to-Back Rate Hikes Squeeze Home Buyer Budgets
If you’ve been saving for a home and wondering why your budget doesn’t stretch as far as it used to, you’re feeling the real-world impact of back-to-back interest rate increases. Each hike doesn’t just raise repayments on existing loans — it also reduces how much new buyers can borrow.
How Rising Rates Shrink Your Borrowing Power
When the RBA increases the cash rate, lenders adjust the rates they use to assess your loan application. This means the amount you can borrow today is lower than it was even a few months ago — even if your income hasn’t changed.
- A couple earning $150,000 combined may have lost $40,000–$60,000 in borrowing capacity since the hikes began
- Lenders assess at a buffer rate (typically 3% above the product rate), further limiting capacity
- Higher rates also mean higher stamp duty thresholds become harder to reach
Strategies to Maximise Your Budget
While you can’t control interest rates, there are practical steps you can take to strengthen your position as a buyer:
- Reduce debts: Pay down credit cards, personal loans, and buy-now-pay-later balances before applying
- Boost your deposit: A larger deposit means a lower LVR, which can unlock better rates
- Explore government schemes: First Home Guarantee, Help to Buy, and state stamp duty concessions may help
- Consider different property types: Units and townhouses may offer more accessible entry points
Government Support Worth Exploring
The Australian Government offers several programs designed to support home buyers. The First Home Guarantee allows eligible buyers to purchase with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI). State-level concessions on stamp duty and land tax can also make a significant difference.
What This Means for You
Rate hikes don’t have to derail your home ownership plans. With the right strategy and expert guidance, you can still find a path to your first home — or your next one. A mortgage broker can map out your options, identify schemes you qualify for, and find lenders who will offer you the most competitive terms.
Speak with Jason Le at Finance Hub to understand how this affects your situation. Book a complimentary assessment at finhub.net.au or call 1300 FINHUB (0480 03 03 03).
Finance Hub and Networks Australian Credit Licence 573164. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.
