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, so does the assessment rate (the buffer sits on top of the actual rate), 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.