Planning for a potential interest rate rise in Sydney
A higher interest rate doesn’t necessarily have to derail your Sydney property plans if the repayments remain comfortably within your budget.
Markets are now pricing in a 76% chance that the Reserve Bank of Australia (RBA) will increase the cash rate in September, while Westpac expects the RBA to hold this month before raising the cash rate from 4.35% to 4.60% in November.
Canstar calculates that a 0.25 percentage point increase would add around $92 a month to repayments on a $600,000 mortgage, $115 on $750,000 and $153 on $1 million.
But borrowers who can comfortably absorb that increase could potentially turn those higher repayments to their advantage later. If interest rates eventually fall and they continue making the same repayments, more of each repayment would go towards principal rather than interest.
Over time, that could help borrowers pay off their home loans sooner and reduce the total interest paid.
Rather than focusing solely on where rates might go next, understanding what you can comfortably afford at today’s rates can help you make property plans that work across different interest rate environments.
About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.