PALISADE BROKERS / MARKET INSIGHTS
RBA WATCH · OCTOBER 2026Before the November RBA decision: stress-test your mortgage repayments
Put the headlines into perspective. Compare repayment scenarios, check your household buffer and make your next loan review more useful.
The next interest rate headline will tell you what changed in the economy. Your loan balance and household budget will tell you what that change means at home.
With another inflation release and an RBA decision approaching, a useful task is to test your repayments before deciding whether to negotiate, refinance, fix or keep your current loan. You do not have to predict the decision to prepare for it.
THE QUICK ANSWER
On an illustrative $800,000 principal-and-interest loan with 25 years remaining, a mortgage rate change from 6.00% to 6.25% adds about $123 a month. A change to 6.50% adds about $247 a month. These are calculated scenarios, not rate forecasts, current offers or a recommendation.
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Repayment calculatorWorked examplesLoan option comparisonFrequently asked questionsWhy review your mortgage before November’s decision?
The ABS has scheduled its September 2026 Consumer Price Index release for 28 October at 11.30 am AEDT. The RBA lists its next cash rate update for 3 November at 2.30 pm Sydney time. Neither announcement had occurred when this article was checked on 26 October. [1] [2]
These are useful checkpoints, not a signal that a particular outcome is certain. Inflation matters to monetary policy, but the RBA weighs a broader economic picture. One release cannot tell a household exactly where its mortgage rate will go. [3]
The distinction between the cash rate and your mortgage rate also matters. Your lender sets your loan rate and advises you of any change. Start this exercise with your actual mortgage rate, rather than entering the RBA cash rate in a repayment calculator. [2] [4]
Preparation is useful across outcomes. If rates rise, you have tested the pressure. If they hold, you still understand your budget. If they fall, you can review what to do with any reduction in required repayments.
Gather four numbers before you calculate
Find your current balance, annual interest rate, remaining loan term and minimum repayment on your statement or banking app. Record whether the loan is principal and interest, interest-only, fixed, variable or split. For split loans, run the tool for each component and add the relevant repayments together.
Use the remaining term, not the term you originally signed up for. An $800,000 balance with 20 years left behaves differently from the same balance with 30 years left. For example, at a constant illustrative 6.00%, monthly principal-and-interest repayments are about $5,731 over 20 years and $4,796 over 30 years. The lower monthly figure comes with a longer repayment period.
Also separate your minimum repayment from any voluntary extra amount. If your minimum rises, that extra amount may provide some flexibility, but confirm how the lender will adjust your direct debit.
APPLY THE ARTICLE TO YOUR LOAN
What would a rate change mean for you?
Compare monthly repayments using your own numbers. All rates below are scenarios, not forecasts or lender offers.
Interactive calculations require JavaScript. If it is disabled, use the static repayment table further below; the figures shown here are the default $800,000 example only.
12 × monthly change: +$1,475. Rates assumed unchanged during that illustration.
Add monthly income and other expenses to see the modelled amount left after your mortgage.
| Scenario | Rate | Monthly | Change |
|---|---|---|---|
| Current rate | 6.00% | $5,154 | $0 |
| +0.25 percentage points | 6.25% | $5,277 | +$123 |
| +0.50 percentage points | 6.50% | $5,402 | +$247 |
| +1.00 percentage points | 7.00% | $5,654 | +$500 |
| +3.00 percentage points | 9.00% | $6,714 | +$1,559 |
Principal and interest: equal monthly repayments over the remaining term. Actual lenders may calculate daily interest and round differently.
No fees, offset balance, redraw, extra payments, rate changes during the term or future interest-only expiry are modelled. Results are rounded to whole dollars; changes use unrounded values. This is a budgeting illustration, not financial advice, a lender serviceability test or an approval estimate.
What could a 0.25 or 0.50 percentage point increase add?
The examples below hold the remaining term constant at 25 years. They show the effect of changing the mortgage rate itself; they do not assume that an RBA decision will be passed through by every lender.
| Loan balance | At 6.00% | At 6.25% | At 6.50% | Extra at 6.50%* |
|---|---|---|---|---|
| $500,000 | $3,222 | $3,298 | $3,376 | +$155 |
| $800,000 | $5,154 | $5,277 | $5,402 | +$247 |
| $1,000,000 | $6,443 | $6,597 | $6,752 | +$309 |
Illustration only. Constant rate, monthly repayments, no fees, offset balance or extra payments. Rates are hypothetical. Figures are rounded to whole dollars. *Change from 6.00%, calculated before rounding. Actual lender calculations may differ.
A quick check is only the first layer
Testing small changes helps translate the next headline into dollars. It is sensible to examine a wider range too. Moneysmart suggests checking repayments with rates three percentage points higher to allow breathing room. That is a separate budgeting scenario, not a prediction of the next RBA decision. [4]
Use the calculator’s +3.00 preset for that wider check. If your loan is interest-only, remember that its current payments do not repay principal and that the calculator does not model the later switch to principal and interest.
What does the change mean for money left each month?
Consider a hypothetical household with $12,000 in monthly take-home income and $5,500 in other expenses. With the $800,000 loan above, an illustrative rise from 6.00% to 6.50% reduces the amount left after the mortgage and those expenses from about $1,346 to $1,098 a month.
That is roughly $247 less room each month before any costs missing from the budget. It does not mean the loan is affordable or unaffordable for that household. It shows where to look next: irregular bills, savings commitments, upcoming income changes and the cash genuinely available for unexpected expenses.
Build your own comparison using recent transactions. Convert annual or quarterly bills into monthly allowances. Keep funds for known expenses separate from an emergency buffer, so the same money is not counted twice.
| Check | Ask yourself | Why it matters |
|---|---|---|
| Recurring costs | Does my budget reflect current spending, including other debt payments? | An outdated allowance can overstate the money left each month. |
| Known irregular bills | Have I allowed for insurance, rates, strata, school or vehicle costs? | A comfortable average month may hide a difficult bill month. |
| Cash buffer | What is available after money earmarked for known expenses? | The same savings cannot cover a planned bill and remain an emergency reserve. |
If the scenario shows a shortfall, contact your lender early to discuss assistance. Refinancing is subject to assessment and is not a guaranteed way out of repayment difficulty. [7]
Reprice, refinance or fix: compare the question each option answers
A repayment stress test does not automatically point to switching lenders. It gives you a clearer brief for a discussion. Are you looking to reduce cost, increase certainty, preserve flexibility or simply understand your current position?
| Option | Question it may address | Trade-off to examine |
|---|---|---|
| Rate review with current lender | Can my current pricing be reviewed without moving the loan? | Compare the revised rate with costs, features and alternatives; a discount is not guaranteed. |
| Refinance | Would another loan better suit my needs after switching costs? | Check assessment requirements, costs and the proposed term; a lower payment can reflect a longer loan. |
| Fixed rate or split structure | How much repayment certainty do I want? | Consider break costs and restrictions alongside the flexibility of the variable portion. |
| Keep current loan | Does my existing structure still suit me? | Set a review trigger rather than assuming the current arrangement will always remain suitable. |
When comparing a refinance, keep the remaining term consistent and include relevant fees, potential break costs and any lenders mortgage insurance. Palisade’s refinancing strategy guide explores the wider decision. [5]
Fixing is a separate choice about certainty and flexibility. It is not a way to guarantee that you will beat future variable rates. Review any limits on extra repayments, offset access and early changes against your plans. [6]
What to do before and after the announcements
- Before the release: gather loan details, run a modest change and a wider stress scenario, and note any budget pressure.
- Before changing your loan: compare alternatives using the same balance and remaining term, then consider fees, features and eligibility.
- After the RBA decision: read your lender’s own notice. Confirm whether your rate changes, when it takes effect and the new required repayment.
- After a repayment change: update your household budget and direct debit arrangements, then set a date for your next review.
Keep a simple record of the balance, rate, term and assumptions used in your check. A result from today is a snapshot. It becomes less useful as your balance, rate or circumstances change.
For broader background, see Palisade’s interest rate outlook guide. Use the published announcements for what actually happened and your own loan information for the household impact.
TURN THE NUMBERS INTO A CONVERSATION
Review your home loan with a clearer starting point
Have your current statement, remaining term and household budget ready. Speak with Palisade Brokers about the options worth exploring for your situation.
Discuss your home loanMortgage stress test FAQs
What is a mortgage stress test?
It is a budgeting exercise that compares your repayment at your current mortgage rate with repayments at hypothetical rates. It is not a lender serviceability assessment, borrowing limit or approval decision.
How much does a 0.25 percentage point rate rise add to an $800,000 mortgage?
With 25 years remaining on a principal-and-interest loan, a change from an illustrative 6.00% to 6.25% increases the monthly repayment by about $123, from $5,154 to $5,277. Different balances, rates and terms give different results. Fees and offset balances are excluded.
Will my mortgage rate change by the same amount as the RBA cash rate?
Not automatically. Your lender sets your mortgage rate and tells you whether it is changing, its effective date and the required repayment. The calculator models a change to your mortgage rate, not a guaranteed lender response to an RBA decision.
Should I fix my home loan before the next RBA meeting?
That depends on your circumstances and the costs, certainty and flexibility of the available options. Compare fixed, variable and split structures with your broker or lender. Fixing does not guarantee a lower overall cost than a variable loan.
Does this calculator include my offset account or extra repayments?
No. It models the entered loan balance, rate, term and repayment type only. It excludes fees, offset balances, redraw, extra repayments and future rate changes. Interest-only results do not model the later switch to principal and interest.
Why use my remaining term when comparing a refinance?
It helps isolate the effect of pricing and costs. Extending the term can reduce the monthly payment while increasing total interest. Ask for a comparison over the same remaining term before considering a different term.
What should I do if the budget check shows a shortfall?
Review the figures and contact your lender early to discuss assistance. A calculator result does not establish eligibility for a refinance or for hardship arrangements. You can also read Moneysmart’s mortgage repayment help for guidance on support.
