Interest rate rises don’t just affect repayments—they also impact how much you can borrow.
Why borrowing power changes
Lenders assess your ability to repay a loan using a buffer rate above the actual interest rate. As rates rise, this buffer increases, reducing the amount you may be eligible to borrow.
What this means for buyers
If you’re:
- A first home buyer → You may need to adjust your price expectations
- An upgrader → Your next purchase may need careful planning
- An investor → Lending conditions may be tighter than before
How to improve your borrowing capacity
There are ways to strengthen your position:
- Reduce existing debts
- Cut unnecessary expenses
- Increase your deposit
- Review loan structures and lenders
Why early planning matters
Getting clarity on your borrowing power early can:
- Help set realistic budgets
- Strengthen negotiations with sellers
- Avoid surprises during the application process
Don’t rely on online calculators alone
Borrowing capacity can vary significantly between lenders. A mortgage broker can assess multiple options and provide a more accurate, tailored estimate.