Stress-Test Your Mortgage: What Happens If Rates Go Up 3%
Your bank already stress-tested you. When you applied, APRA required the lender to check that you could repay at your product rate plus 3 percentage points. That buffer is still 3 points, confirmed by APRA on 28 May 2026.
Most people never see the result of that test. Here's what it looks like on real loans.
| Loan (30 yr, P&I) | At 6.0% | At 9.0% | Extra per month | Extra per year |
|---|---|---|---|---|
| $500,000 | $2,998 | $4,023 | $1,025 | $12,304 |
| $600,000 | $3,597 | $4,828 | $1,230 | $14,765 |
| $750,000 | $4,497 | $6,035 | $1,538 | $18,456 |
| $900,000 | $5,396 | $7,242 | $1,846 | $22,148 |
A 3 point rise lifts the repayment by about 34% regardless of loan size. The dollar figure is what changes.
Compare repayments at two rates in the Mortgage Calculator, see the effect of a specific rise in the Rate Rise Impact Calculator, check what a lender would actually approve in the Borrowing Capacity Calculator, and test a switch in the Refinance Calculator.
Why this matters right now
The RBA left the cash rate at 4.35% on 11 August 2026. The Board's own language is not comforting reading for borrowers. Inflation is expected to stay high for a while, there are upside risks, and the Board hasn't ruled out further rises if inflation lingers above target longer than forecast.
APRA's May 2026 statement was blunter about the backdrop. Rates have risen over recent months while inflation stays high, and higher oil prices are adding to cost pressures for households.
None of that is a prediction. It's a reason to know your own number before someone else calculates it for you.
How to run the test yourself
Four steps. Takes about five minutes.
1. Find your current rate and balance. Not the rate you signed at. The one on your last statement.
2. Add 3 percentage points. On 6.14%, you're testing 9.14%. That's the same buffer your lender used.
3. Calculate the repayment at the higher rate over your remaining term, not a fresh 30 years. A loan with 22 years left behaves differently from a new one.
4. Subtract the difference from your monthly budget. Not from your income. From what's actually left after everything else. That's the real test.
The three-point rise won't arrive in one go
Rates move in 0.25% steps, so the useful question is where your breaking point sits. On a $600,000 loan at 6% over 30 years:
| Rate | Monthly repayment | Extra vs 6% |
|---|---|---|
| 6.0% | $3,597 | baseline |
| 6.5% | $3,792 | $195 |
| 7.0% | $3,992 | $395 |
| 7.5% | $4,195 | $598 |
| 8.0% | $4,403 | $805 |
| 9.0% | $4,828 | $1,230 |
Each 0.5% costs roughly $200 a month on a $600,000 loan. Find the row where your budget stops working. That's the number to plan around.
The debt-to-income limit you probably missed
Something changed in February 2026 that affects anyone borrowing or refinancing now.
APRA activated a debt-to-income lending limit. Banks can write no more than 20% of new mortgage lending at a DTI of six times or above. It applies separately to owner-occupier and investor books, is measured quarterly, and exempts owner-occupier bridging loans and loans for buying or building new dwellings.
Your DTI is total debt divided by gross household income. A household on $150,000 borrowing $900,000 is at 6.0 times.
What this means in practice: high-DTI borrowers are now competing for a rationed slice of each bank's book. Being at 6.2 times doesn't make you ineligible, but it does make you the kind of application a lender declines when their quarterly quota is full. That's a new reason to check where you sit before you apply.
What to do if the test fails
Build the gap now, not later
If the 9% repayment is $1,230 more than your current one, start paying that difference into an offset account today. Two things happen. You cut interest immediately, and you find out over six months whether the higher payment is survivable while the stakes are still low.
The Offset Mortgage Calculator shows what the balance does to your interest bill.
Shop the rate
The gap between what banks charge existing customers and what they advertise to new ones is usually worth more than any budgeting exercise. Check what's available in home loan comparisons, then price the switch in the Refinance Calculator. Include the discharge and application fees, not just the rate.
Consider fixing part of it
Splitting the loan caps your exposure on the fixed portion while leaving the variable side flexible for extra repayments. It's a hedge, not a bet. The Fixed vs Variable Calculator lays out the trade.
Cut the balance while you can
Every dollar off the principal reduces the dollar impact of every future rise. Extra repayments made at 6% are doing quiet work if rates head to 8%.
The 30% rule and why it's rough
Mortgage stress is usually defined as repayments above 30% of gross household income. It's a rule of thumb and it's a blunt one.
A household earning $250,000 paying 35% has roughly $135,000 left before tax. A household earning $90,000 paying 30% has $63,000. The percentage says the second household is fine. The dollars say otherwise.
What's left after the repayment is the number that matters. Run your income through the Income Tax Calculator to get the actual take-home figure, then subtract the stressed repayment. If that leaves less than your fixed costs, the loan is tighter than the percentage suggests.
The bottom line
A 3 point rise lifts a repayment by about 34%. On a $600,000 loan that's $1,230 a month, or $14,765 a year.
Your lender ran this test before they approved you. Running it yourself costs nothing and tells you whether the buffer you were assessed against still exists in your actual budget.
FAQ
What is a mortgage stress test?
A check of whether you could still meet repayments at a higher rate. APRA requires lenders to assess new borrowers at the product rate plus at least 3 percentage points, so testing yourself at the same level uses the bank's own standard.
What is the APRA serviceability buffer in 2026?
3 percentage points. APRA confirmed on 28 May 2026 that the buffer stays unchanged.
What is the new debt-to-income limit?
From February 2026, banks can write no more than 20% of new mortgage lending at a debt-to-income ratio of six times or above. It applies separately to owner-occupier and investor lending and is measured quarterly.
How much of my income should go to mortgage repayments?
Mortgage stress is commonly pegged at more than 30% of gross household income. Treat it as a rough marker. What's left after the repayment matters more than the percentage.
What should I do if I fail my own stress test?
Build the gap into an offset as a buffer, cut the balance now, shop for a cheaper rate, or fix part of the loan. All of these are easier before rates move than after.
Sources checked August 22, 2026: APRA macroprudential policy settings update, 28 May 2026 for the 3 percentage point serviceability buffer, APRA on activating debt-to-income limits effective February 2026, RBA Monetary Policy Decision, 11 August 2026 for the 4.35% cash rate, and Moneysmart on home loans.
A loan specialist can check your buffer, compare what other lenders would offer at your income, and tell you whether refinancing or restructuring gives you more breathing room.