On Tuesday 3 Nov, the RBA lifted the cash rate to 4.85%, its fifth increase of 2026.
Sigh.
Over the next week or so, your lender is likely to pass on the increase, and your repayments will then be adjusted. The gap between the announcement and when your first higher repayment kicks in is your window to get organised.
Let’s take a closer look at things now, so you’re in the best position to start 2027 off on the right foot.
Why it pays to review your home loan sooner rather than later
Here’s the bit most people don’t realise….
When rates are rising and property prices are softening, the timing of your home loan review matters almost as much as the review itself. There are two reasons why.
1. The value of your home can affect your lending options
If you’re looking for a sharper interest rate or wanting to release equity (to consolidate debt, build yourself a cash buffer or even make some home improvements), the value of your property often dictates what’s possible.
Typically higher the valuation, the better. A higher valuation can result in a lower Loan to Valuation Ratio (LVR). And the lower the LVR, the better the rate you’re likely to secure.
And if you’re looking to release equity, the higher the value, the more equity to have to potentially access.
Let’s look at an example.
Say you owe $600,000 on your loan and your home valued at $900,000. This represents a Loan to Value Ratio (LVR) of about 67%. When you’re looking to release equity, you can often borrow up to 80% of the property’s value (or, have a maximum loan against your home of $720k). Taking into your current loan of $600k, this means there’s about $120,000 in equity you can potentially work with.
If the valuation came in at $850,000 instead, the LVR is sitting around 71%, which reduces the equity accessible to around $80,000.
So when valuations are softening, putting off a home loan review isn’t a neutral choice. A lower valuation might prevent you from qualifying for a lower interest rate and/or limit your ability to release additional funds you might want to borrow.
2. You qualify for finance at the interest rate on the day
If you’re refinancing to a new lender or trying to borrow more from your current one, you will need to requalify for that lending. This means a lender will assess your capacity to make your loan repayments (against today’s interest rates and servicing metrics), even if you’re already making your repayments now without any issues.
If you wait another few months to refinance and rates have increased further in the meantime, assuming everything else is equal, it’s going to be harder to qualify for the loan you already have. Which means you might be stuck with your existing lender paying a higher interest rate.
If your budget already feels stretched, this is the part to pay attention to….
It’s better to qualify for finance sooner rather than later, especially if there further rate rises coming or you’re expecting cashflow to become tighter.
Put those things together and it looks like this…
Wait three months to do a home loan review, and you may find rates have changed, your valuation has come down, and you no longer qualify for the loan you’re wanting. The ideal time to review your loan is well before repayments become an issue, not after.
This is your gentle reminder to have a conversation with us now – there is still plenty of time to get things sorted before the end of the year.
If things are already feeling tight
If your budget is already stretched and you’re feeling anxious about Christmas, first up – you’re not the only one.
The most important thing you can do is speak up early. Investigate your options before you think about leaning on the credit card for groceries or bills.
We know it’s the call nobody wants to make. But there are usually more options on the table when you act early, and much fewer options once card debts have piled up alongside your mortgage.
Rates will do what rates do. Unfortunately, we have no control over this.
The only thing we can control is how ready we are to deal with a change. And how confident we are that our own loan is still suitable for our needs.
We can help you with both of these things.
