Interest Rate Rise Calculator — What the Next RBA Move Costs You

Why the repayment moves less than the rate

A 0.25 percentage point rise on a 6.20% loan is a 4% increase in the interest rate, but only about a 2.4% increase in the minimum repayment. The reason is that a principal-and-interest repayment is two things bundled together, and only one of them responds to the rate. On a $600,000 loan at 6.20% with 25 years to run, roughly $3,100 of the $3,939 monthly repayment is interest and only about $839 is principal; the rate rise lifts the interest component and leaves the principal component broadly where it was. The corollary is uncomfortable: the total interest bill moves far more than the repayment does. The same 0.25 point rise adds around $93 a month to the repayment but roughly $27,900 to the interest paid across the remaining 25 years, because the higher rate applies to every month of the loan. Late in a loan the effect reverses — with five years left the repayment barely moves, because almost all of it is principal.

The gap between the decision and your bank account

Australian coverage treats an RBA decision as though it lands on household budgets that afternoon. It does not. The May 2026 round is a clean illustration because the dates are on the record: the RBA moved on 5 May, CommBank made its 0.25% increase effective 15 May, and Bank First — which also moved — notified affected customers from 18 May but did not change their actual repayment amount until 23 June, seven weeks after the decision. Industry guidance across lenders puts repayment changes at 20 to 30 days, stretching to 60 days at some. Two practical consequences follow. Your budget has more warning than the headlines imply, which is genuine breathing room if you use it. But the delay is a deferral, not a discount: interest accrues at the higher rate from the effective date, so the amount you did not pay in the notice period is still owed and simply shows up in the balance. Lenders are also under no obligation to pass a cash rate move on in full, or at all, and out-of-cycle moves in either direction happen.

What the APRA buffer was actually for

Every Australian home loan approved since October 2021 was tested at the borrower’s interest rate plus 3.00 percentage points, a requirement APRA has kept unchanged through 2026 on the grounds of high household debt and economic uncertainty. That buffer is widely misread as conservatism on the lender’s part. It is better understood as the regulator’s explicit estimate of how far rates could move before a borrower at their approval limit is in trouble. Three increases during 2026 have added 0.75 percentage points, so a quarter of the assumed headroom is gone, and a further 0.25 point rise in August would take it to a third. For most borrowers this is uncomfortable rather than dangerous, because incomes have moved and most did not borrow at their ceiling. It matters materially for anyone who borrowed near their maximum in 2024 or 2025 at rates lower than today’s, and for anyone rolling off a fixed rate set during that period, who absorbs the whole cycle in a single step rather than over three increases.

Assumptions and limits of this calculator

Stated so you can judge the output. (1) It assumes your lender passes the scenario on in full and immediately; lenders are not required to do either, and out-of-cycle moves happen. (2) It calculates a standard principal-and-interest repayment on the balance and remaining term you enter, so it will not match a statement exactly — lenders differ on daily interest accrual, monthly versus fortnightly cycles, rounding and fees, and none of those are modelled here. (3) The default rate of 6.20% is the average owner-occupier variable rate across 64 lenders in late June 2026; the RBA’s figure for rates on outstanding loans is lower at 5.90% because it includes older fixed loans. Use your own rate. (4) The cumulative comparison assumes your rate was 0.75 points lower before February 2026, which holds only if your lender passed on all three 2026 increases in full. (5) The buffer figure assumes full pass-through and does not know your original assessment rate. (6) The pass-through dates are indicative, based on the observed May 2026 round, not a commitment by any lender. (7) Nothing here predicts the 11 August decision — market pricing and bank forecasts are reported as at 3 August 2026 and will move. This is general information, not financial advice, and does not consider your circumstances.

Sources

• RBA cash rate decisions 2026 — increases in February, March and 5 May 2026 taking the cash rate to 4.35%; held in June. Next decision Tuesday 11 August 2026, 2:30pm AEST, after a two-day board meeting on 10–11 August.
• Market expectations as at 3 August 2026 — roughly 81% priced for a hold; CommBank, NAB and ANZ forecasting no change; Westpac forecasting +25bp in August and September; 55% of surveyed economists expecting at least one further 2026 increase, 62% of those naming August (Finder, Aussie, Reuters poll coverage).
• Pass-through timing — CommBank rate-change notice, variable home loan rates +0.25% effective 15 May 2026; Bank First rate-change notice, rates effective 22 May 2026, customers notified from 18 May, new repayments from 23 June 2026.
• APRA — mortgage serviceability buffer of 3.00 percentage points, in place since October 2021 and maintained in 2026.
• ABS Lending Indicators, March 2026 — average new owner-occupier loan $734,881; first home buyers $614,000.
• Average owner-occupier variable rate ~6.20% (median 6.09%) across 64 lenders, late June 2026; RBA average rate on outstanding owner-occupier variable loans 5.90%, June 2026.

Last updated: 3 August 2026.

General educational information only — not financial, tax or credit advice, and it does not consider your objectives or circumstances. Rate forecasts are market expectations, not predictions, and they change. Your lender’s notice is the authority on what your rate and repayment will actually be. Consider licensed advice before acting on a decision of this size.