With Interest Rates Rising in 2026, Does an Investment Loan Still Stack Up Financially?
Higher rates increase your holding cost. They also tend to affect rental market dynamics. Whether the investment stacks up in 2026 depends on your specific numbers and personal financial position.
People considering an investment property often review factors such as rental income, borrowing costs and their personal financial position. A licensed financial adviser can provide advice tailored to your circumstances.
What’s Changed With Rising Rates
An investment property that was positively geared at 4.5% interest may now be negatively geared at 6.5%. This means more cash out of pocket each month, and the buffer for vacancy periods shrinks.
Interest and other property expenses may have tax implications. Investors should seek advice from a registered tax agent or accountant regarding their individual circumstances.
Rental Market Dynamics in 2026
Market conditions may affect rental demand and property prices. These factors can change and are influenced by economic conditions.
The Serviceability Buffer Reality
Lenders apply a 3% serviceability buffer on top of the current rate. At current rate levels, investment loans are being assessed at significantly elevated rates. Knowing your actual capacity now — rather than assuming it’s what it was — is the starting point for any real decision.
Factors Some Investors Consider
Some investors review rental income relative to property costs when assessing affordability. Tax outcomes from investment properties vary depending on personal circumstances — investors should seek advice from a registered tax agent. Depreciation may apply to some investment properties — investors should speak with a qualified tax adviser or quantity surveyor to understand any applicable deductions.
This information is general in nature and does not constitute financial, tax or investment advice. Mortgage brokers are authorised to provide credit assistance only. You should seek advice from a licensed financial adviser and/or registered tax agent before making investment decisions.
You may wish to speak with a licensed mortgage broker to assess your personal circumstances.
This is general information only and does not constitute financial or investment advice. Property investment carries risk, including the possibility of capital loss. Speak with a licensed mortgage broker and financial adviser before making investment decisions. All loans are subject to lender approval.
Sources: RBA, Cash Rate Target 2026; CoreLogic, Australian Property Investment Report 2025; ATO, Rental Properties 2025; APRA Quarterly Property Exposures 2024.
