Unlucky Friday the 13th for millions of borrowers as higher rates take effect

It’s an extra unlucky Friday the 13th for millions of borrowers across the country, with the Reserve Bank’s recent interest rate hike set to start flowing through to households in the form of higher mortgage repayments.

Three of the big four banks – Commonwealth Bank, NAB and ANZ – announced they would pass on the RBA’s 25 basis point increase in full to their variable loan customers, effective Friday 13 February.

The impact will be felt immediately for those making interest-only repayments, a structure popular with investors, with daily interest to start accruing at the higher rate from today and reflect in the next payment cycle.

Those paying principal and interest may have a little more time before they see a change to their cash flow, with lenders required under the National Credit Code to provide at least 20 days’ notice for any increase to a borrower’s minimum monthly repayments.

That means the majority of borrowers can expect to receive a notice from their bank outlining what their new minimum monthly repayment will look like under the higher interest rate, though interest on the outstanding balance will start accruing at the higher rate from today.

Variable home loan customers with CBA, NAB and ANZ will see higher interest rates take effect from Friday 13 February, and Westpac customers from Tuesday 17 February. Picture: Getty

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Westpac customers still have a few more days up their sleeve, with the 25 basis point increase coming into effect on Tuesday 17 February.

In total, the big four banks account for around three quarters of all home loans in Australia.

It follows a decision by the RBA to raise the cash rate during its first interest rate decision of 2026, reversing one of three rate cuts delivered over the preceding 12 months and potentially adding hundreds of dollars to home loan repayments each month.

Calculations by realestate.com.au estimate a borrower who recently purchased a median priced house in a capital city could see their monthly repayments jump as much as $204 per month in Sydney, and by between $125 and $150 per month in Adelaide, Perth, Melbourne, Canberra and Brisbane.

Potential cost of one rate hike on a mortgage for a median priced house

Buyers who purchased a median priced unit in each capital city could see repayments rise more than $100 per month in Sydney and Brisbane, and more than $85 per month in Adelaide and Perth.  

Potential cost of one rate hike on a mortgage for a median priced unit

Inflation has risen strongly since the middle of last year, with RBA forecasts not anticipating it will return to the midpoint of its 2-3% target range until mid-2028, raising the chance of another rate hike later this year.

Were that to eventuate, a Sydney house buyer would be paying almost $5,000 per year in additional interest than they would have before the RBA began raising rates, and more than $3,000 per year in Brisbane ($3,591), Melbourne (+$3,070), Canberra ($3,085), Adelaide ($3,036), Perth ($3,186.32).

These calculations assume buyers have put down a deposit of 20% on top of other upfront costs to bring their loan-to-value ratio to 80%.

Sydney buyers of a typically priced house potentially face thousands of dollars in additional interest repayments over the year. Picture: Getty

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But with property prices sitting at record highs across the country, qualifying for a home loan in a capital city is becoming further out of reach for low- and middle-income households. PropTrack's latest Housing Affordability Index shows a typical household could afford to buy just 15% of homes sold across the country in 2024-25.

Data released by Australia’s largest mortgage lender, CBA, shows the stark reality for borrowers looking to buy into the rising property market, with high income earners accounting for the majority of home loan applications in the six months to December.

CBA group home loan applications by gross income band

Around half of all new owner occupier home loan applications came from borrowers earning more than $200,000, with the figure jumping to three quarters for investors.

Approximately one in every four home loans in Australia is through CBA.

Delivering a bumper half year cash profit of $5.4 billion on Wednesday, CBA chief executive Matt Comyn told investors the bank had helped customers buy more than 79,000 homes in six months and was settling more than 3,000 home loans per week.

Lending data released by the Australian Bureau of Statistics revealed a lending bonanza in the final quarter of 2025, before the rate hike was delivered in February.

Of the near 150,000 home loans approved during the three months to December, 60,000 were issued to investors, a sharp 24% increase compared to a year ago.

First-home buyer loans also jumped as borrowers tapped into expanded government support such as the 5% Deposit Scheme, allowing eligible first-timers to purchase a home with a deposit of just 5%.

ABS head of finance statistics Mish Dan said it was the largest rise in first-home buyer loans in two years.

“The Australian Government 5% Deposit Scheme has increased the eligibility criteria for first home buyers and we are seeing the early effects of this in our data.” Ms Tan said.

13% of borrowers say they'll struggle to meet their home loan repayments with a 25bp increase. Picture: Getty

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But a new survey from Mortgage Choice for the December quarter paints a stark picture for these recent borrowers who are yet to build up an equity buffer, with over a quarter of borrowers unprepared for the recent rate hike.

In the wake of last year’s three interest rate cuts, nearly 60% of survey respondents with a mortgage kept their repayments at the higher level to pay off their loan faster. However 26% lowered their repayments to free up cash. A further 10% noted they didn't realise they could change their repayments.

Mortgage Choice chief executive Anthony Waldron said while the majority of borrowers will be able to handle higher repayments either with or without sacrifices to their discretionary spending, for others the impact will be more hard felt.

“13% of borrowers said they would struggle to meet their home loan repayments and would need to dip into their savings if their interest rate rose by 25 basis points,” Mr Waldron said.

“The Reserve Bank’s decision to lift the cash rate at its February monetary policy meeting is a timely reminder that if you’re worried about how rate hikes might impact your lifestyle, being proactive is your best defence.”

For borrowers who have continued to make higher repayments on their home loan despite last year’s rate cuts, this Friday the 13th may not bring the same mortgage shock as those who chose to spend the savings instead.