Understanding the Impact of a 0.25% Rate Rise
A 0.25% increase in interest rates may not sound like much, but when applied to a home loan it directly affects your monthly mortgage repayments — and that adds up over time. Let’s look at three typical loan sizes in Mitchell Shire and see how a 0.25% rise changes your monthly payments.
Scenario 1 — $600,000 Loan
- Current repayments (example rate 6.0%): ≈ $3,597 per month
- After a 0.25% rise (6.25%): ≈ $3,714 per month
- Monthly difference: +$117
- Extra cost per year: ≈ $1,404
So for a $600,000 loan, a 0.25% rate rise can cost you about $117 more each month — money you’d otherwise be able to save or spend on other essentials.
Scenario 2 — $650,000 Loan
- Current repayments (6.0%): ≈ $3,893 per month
- After a 0.25% rise (6.25%): ≈ $4,019 per month
- Monthly difference: +$126
- Extra cost per year: ≈ $1,512
On a $650,000 loan, that little quarter-percent bump can add up to around $1,500 per year in extra interest costs.
Scenario 3 — $700,000 Loan
- Current repayments (6.0%): ≈ $4,190 per month
- After a 0.25% rise (6.25%): ≈ $4,328 per month
- Monthly difference: +$138
- Extra cost per year: ≈ $1,656
For a $700,000 loan, the impact grows slightly larger — about $138 more each month once rates rise.
🧠 Why This Matters
A quarter-percent rate rise doesn’t just increase your monthly payment — it also:
- Reduces your borrowing power (you might qualify for a smaller loan)
- Increases the total interest paid over the life of the loan
- Affects your budget flexibility (less cash for groceries, holidays, savings or renovations)
📌 In Simple Terms
A 0.25% interest rate rise feels small, but over time it quickly adds up:
✔ $100–$140 more out of your pocket every month
✔ Around $1,400–$1,650 extra each year
✔ Thousands more in interest over the life of your loan
If you’d like, I can also break this down by weekly costs or show you how much faster you could pay your loan off by keeping repayments the same if rates go up. Just let me know!