This calculator is designed to help you to crunch the numbers to find out how much your home loan repayments would be if interest rates change.
Mozo’s database tracks home loan interest rates from banks, mutuals and credit unions across Australia – use it to start your comparisons and see some of Australia’s best home loans.
Mozo’s home loan rate change calculator tells you how much an interest rate hike or cut could change your monthly mortgage repayments. It does this by calculating your repayments based on your:
Loan amount
Loan term
Loan type
Repayment frequency
Current interest rate
Rate change size
It then compares the numbers and finds the difference. All you need to do is put in the figures.
How much your mortgage increases or decreases after an interest rate change depends on multiple factors, such as the size of your remaining loan amount, loan term, and current home loan interest rate.
A minor rate hike of several basis points (like 0.05%) will probably only add around $5 to $15 to your monthly repayments. However, a larger rate hike (0.25%) could add $75 or more.
Mozo’s mortgage home loan rate change calculator starts with a standard rate hike size of 0.25% so you can see how a rate rise could affect you.
However, it also lets you look ahead with larger, more cumulative rate increases of 0.75% or more, so you can plan for future rate hikes or compare variable home loans.
If your home loan interest rate is about to increase, there are some things you can do.
The first step is determining how much the rate change will add to your household budget. Our rate change calculator can help you with this.
The second step is to call your mortgage lender. See if you can negotiate your interest rate down to something more manageable, especially if your lender offers cheaper rates to new customers but not to you, their loyal borrower.
The final step is to look at your finances long-term. Can you handle the rate hike if you tighten your belt or take on extra work hours, or do you need a rate change? Outside of using interest saving mortgage features such as an offset account, it could also be worth looking into refinancing your home loan.
Depending on how the economy fares, the Reserve Bank of Australia (RBA) might decide to raise or lower official interest rates to steer things in the right direction.
For example, if the economy is underperforming, the RBA might lower interest rates to stimulate demand. If demand is too high, the RBA might raise interest rates to keep inflation in check.
See more about how this works in our monetary policy guide.
Home loans use the official cash rate as a benchmark for their variable lending rates. If the cash rate goes up or down, we can usually expect home loan interest rates to move by the same amount.
Home loan interest rates are typically much higher than the cash rate. This markup covers a lender’s business costs and gives them a profit.
For fixed home loans, lenders typically look at the cash rate, economy, and other lenders to set their rates, since they don’t change for the fixed terms.
If your lender decides to hike your home loan interest rate, you can expect your mortgage repayments to increase. If it cuts rates, you can expect your loan repayments to decrease.
Rising interest rates usually cause a slowdown in the Australian property market. This is because the cost of borrowing increases, so home buyers can sometimes find it harder to get a mortgage.
Lower interest rates typically cause a boom in the property market for the opposite reason: home buyers suddenly find it much easier to finance a mortgage.
Your mortgage lender has the power to adjust the variable interest rate on your mortgage, but you have some power over your interest rate, too. You can change your interest rate by refinancing or negotiating a cheaper rate with your lender.