2026 Mortgage Stress Test: Can Your Budget Handle Rate Rise?

To be honest, are you feeling a bit overwhelmed lately? We hear the same news every day: banks are raising fixed rates, regulators are auditing, and experts are talking about a cooling market. For Sydney homeowners and buyers, the real question behind these headlines is: Is your household budget actually secure? Today, let's skip the speculation and talk facts. A simple five-minute test can show you exactly where you stand.

First, look at what your actual monthly mortgage payment is right now. Take out your statement and look at that number. That's your starting point, your baseline.

Now, let's say rates go up another 0.5%. Work out how much your monthly payment would increase. Use your phone's calculator or your bank's app for a quick figure. That number is your "stress gap."

If your current loan is 1 million Australian dollars, a 0.5% rate increase would raise your annual repayments by 5,000 AUD, which translates to an increase of approximately 417 AUD per month.

If your current loan is 4 million Australian dollars, a 0.5% rate increase would raise your annual repayments by 20,000 AUD, equivalent to an increase of approximately 1,667 AUD per month.

Here comes the crucial question: From your regular monthly spending, can you comfortably find this "gap" in your budget? For example, by eating out a few less times or pausing a couple of subscriptions you don't really use. Ask yourself: Would this cause real strain?

Finally, check your "life raft." Do you have enough emergency savings in your account to cover six to twelve months of that "new," higher payment? This money is your safety net when the waters get rough.

If you answered "yes" to both, then well done – you're in decent shape. It means you have some financial breathing room. You might consider proactive planning, like talking to us about whether there's a better loan structure for you, or preparing for potential next steps.

But if the answer was "no" to either, please don't wait until next month's payment is due to start worrying. Now is the time to be proactive. Reaching out to a mortgage broker like us is far easier than calling your bank in a panic later. We can help you search for a better rate, or take a fresh look at your overall financial strategy.

The lending environment has changed. Banks aren't just looking at your income anymore; they're examining your spending and credit history like auditors. As your broker, our job is to help you get your finances presentation-ready, to present your situation in the strongest light, and to find the right path forward from dozens of different options.

So, treat today as a trigger for action. Take five minutes to run the numbers, then make a decision based on what you find. It's time to take control of your finances, instead of letting the headlines control you.

This article contains general information only and has not considered your personal objectives or situation. Please consider its appropriateness and seek independent professional advice before making any financial decisions.