Mortgage repayments going up?
Time to check your budget.
11/7/20262 min read
How to Budget After an Interest Rate Rise
An interest rate rise can sound small until you put it into household dollars.
If your mortgage repayments are going up, start by checking the new repayment amount and the date it takes effect. Then update your budget so you can see what’s left for the rest of your expenses.
That sounds straightforward. Finding the extra money can be a different story.
What does a small interest rate rise cost?
On 3 November 2026, the Reserve Bank of Australia announced a 0.25 percentage point increase in the cash rate target, taking it to 4.85%. Your mortgage rate and repayment depend on your loan, so check the details your lender gives you. Read the RBA’s announcement.
The amount borrowed makes a big difference to what a rate increase costs.
In November 2008, the average owner-occupier housing loan commitment was about $254,000. By the June quarter of 2026, the average was $731,000. These are figures for new loan commitments, and the historical reporting methods differ. ABS historical housing finance figures and ABS lending indicators.
To put those amounts into everyday dollars, imagine both loans had 30 years remaining and the mortgage interest rate increased from 6% to 6.25%.
On a $254,000 loan, that increase adds about $41 a month to the repayment. On a $731,000 loan, it adds about $118 a month, or more than $1,400 over a year. Both examples assume 30 years remaining and an interest rate increase from 6% to 6.25%
These examples use principal-and-interest repayments over 30 years, excluding fees. They illustrate the effect of loan size and don’t represent actual repayments in 2008.
Wages and living costs have changed too. For the household working through today’s bills, the practical question is how much extra needs to come out of the next pay.
Update your household budget using the new repayment
Use your lender’s confirmed repayment amount when you have it. Check whether it’s monthly, fortnightly or weekly, and use the same period throughout your budget.
For example, an extra $118 a month is roughly $27 a week when spread across a year. If you put aside money weekly for a monthly mortgage payment, that changes how much you need to transfer.
Also check when the first higher payment is due. You may need to adjust the next transfer rather than waiting until next month.
Look at what is already committed
Your bank balance may include money for bills that haven’t arrived yet.
Before deciding what you can move around, look at your mortgage, groceries, electricity, insurance, transport and other commitments. Include the less frequent expenses too, such as registration and annual bills.
Then ask what is genuinely available. If something needs to change, choose a specific adjustment you can keep doing. It’s easier to work with “I’ll reduce this amount by $15 a week” than “I’ll try to spend less.”
What if the budget still doesn’t cover everything?
Sometimes the numbers show that the household is short even after changes. That deserves attention, rather than another week of hoping it works out.
If you’re concerned about keeping up with your mortgage, contact your lender early to discuss your circumstances and available support.
A budget won’t make the higher repayment disappear. It can help you see the gap and explain what’s happening.
Want a hand working through your budget?
I’m Jackie Matjasec, founder of The Simple Budget, based in Logan Village, Queensland.
In a one-on-one budgeting session, we can work through your income, bills and everyday spending and build a practical budget you can keep using.
Find out about personal budgeting sessions with Jackie, available online across Australia.
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The Simple Budget provides general financial education, not personal financial advice. I am not a licensed financial planner, accountant, tax agent, financial counsellor or NDIS provider. Please consider your own situation and seek professional guidance where needed.
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