The Calm Before the Storm? What Does a Rate Rise Mean to You?
- Kevin Leong
- Dec 2
- 3 min read
Australia’s home loan market feels quiet almost too quiet. But behind the scenes, major banks have already started lifting interest rates, especially on fixed home loans.
For many Aussie homeowners and buyers, this raises an important question:
“What happens to my mortgage if rates rise by 0.25% or even 0.50%?”
In this blog, we break it down in simple terms and explain how Lendcap can help you structure your loan to stay protected in a changing rate environment.
Why Are Rates Starting to Rise Again?
Even when the RBA keeps the cash rate steady, banks can still move their own pricing. Recently, several lenders have increased fixed interest rates due to:
Higher funding costs
Ongoing inflation pressures
Expectations of future rate rises
This is why many economists are calling it the “calm before the storm”—a quiet period before possible rate increases across the board.
What Does a 0.25% Rate Rise Mean for You?
To keep things simple, let’s use a $1 million home loan.
If your current variable rate is around 6.00%:
Variable Rate | Approx. Monthly Repayment |
6.00% | ~$5,995 |
6.25% (+0.25%) | ~$6,160 |
6.50% (+0.50%) | ~$6,320 |
What this means:
A 0.25% rise adds about $160 per month
A 0.50% rise adds about $325 per month
That’s an extra $1,900–$3,900 per year
For the average Australian household, this can make a real difference to weekly budgeting.
Why You Should Understand Today’s Fixed Rate Options
Banks have already begun increasing fixed rates, and historically, fixed rates rise before variable rates do.
This means:
Today’s fixed rates may be the lowest you’ll see for a while
Waiting too long could mean locking in a much higher rate later
If you value certainty in your repayments, a fixed rate can help stabilise your budget
But fixed rates also come with limits less flexibility, potential break costs, and restrictions on extra repayments.
This is where split loans become a smart middle ground.
Split Loans: A Balanced Approach for Uncertain Times
A split loan means part of your mortgage is fixed and part remains variable. It lets you:
Lock in certainty with the fixed portion
Maintain flexibility with the variable portion
Reduce the impact of future rate rises
Example: $1 Million Loan Split 50/50
Let’s assume:
$500k fixed at 5.50%
$500k variable at 6.00%
If the variable rate rises by 0.25% or 0.50%, you only feel it on half the loan. This softens the blow compared to having your entire mortgage on a variable rate.
A split loan can help you:
Keep repayments more stable
Still make extra repayments on the variable portion
Use offset accounts and maintain cashflow flexibility
How Lendcap Helps You Navigate Rate Changes
At Lendcap, we specialise in helping Australians structure their mortgages for both stability and opportunity. Here’s what we do:
✔ Compare fixed and variable rates across multiple lenders
Banks move at different times—our job is to find you competitive options.
✔ Help you choose the right loan split
50/50, 70/30, 60/40—your loan can be structured based on your goals.
✔ Model repayments under different scenarios
We show you what happens if rates rise 0.25%, 0.50%, or even more.
✔ Review your loan as the market changes
When your fixed rate expires, we reassess and help you make the next smart move.
Should You Fix Your Home Loan Now?
There’s no universal answer. But with banks already increasing fixed rates, now is a good time to review your options.
A split loan can offer a practical balance:
Security if rates rise
Flexibility to make extra repayments
Potential savings if variable rates fall again later
What matters most is choosing a structure that supports your financial goals and your household budget.
Final Thoughts – Don’t Wait for the Storm to Hit
A 0.25% rise may seem small, but on a $1 million loan it adds up quickly. With Australian banks adjusting rates ahead of the RBA, it’s wise to understand your fixed, variable, and split loan options now—not later.
Lendcap is here to help you:
Reduce the risk of rising rates
Maintain flexibility where it counts
Structure your loan in a smart, balanced way
General Advice Disclaimer
This information is general in nature and does not take into account your personal financial situation, objectives, or needs. Please seek personalised advice before making any home loan or refinancing decisions.
If you’d like Lendcap to explore personalised fixed-rate or split-loan options for your situation, get in touchwe’re here to help you plan ahead before the storm arrives.
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