“Yes, every 0.25% increase reduces capacity by roughly $10,000 to $15,000 for every $100,000 of income. The cumulative effect of three rises this year is significant.”
The RBA’s 0.25% increase on 5 May 2026 — the third of the year — has reduced borrowing capacity for new applicants across all lenders. The mechanism is the serviceability buffer: lenders test repayment ability at the current rate plus 3%. Every increase in the current rate lifts the test rate by the same amount.
The cumulative impact of 2026’s three rises
Three 0.25% increases in 2026 total 0.75% of additional rate. On a $100,000 salary, each 0.25% rise reduces maximum borrowing capacity by approximately $10,000–$15,000. The three 2026 rises together have reduced capacity by approximately $30,000–$45,000 for a single-income borrower at $100,000. For a couple on $200,000 combined, the cumulative reduction is approximately $60,000–$90,000 compared to the start of 2026.
What this means for borrowers currently in the market
If you received a borrowing capacity assessment earlier in 2026 — before the May rise — that figure is now overstated. Most pre-approval letters are subject to lender reassessment before settlement. If you’re relying on an older figure for purchasing decisions, getting a current assessment is important.
What hasn’t changed
Your income hasn’t changed. Your savings rate hasn’t changed. The government schemes — First Home Guarantee, Help to Buy — are still available with the same eligibility rules. The property market in most states hasn’t adjusted downward to match reduced borrowing capacity. The reduced capacity affects the loan size, not the availability of the property.
What you can do
Get a current assessment across multiple lenders. Lender variation has widened in 2026 — the difference between the most conservative and most accessible lender for the same profile is now material. Reduce credit limits and close unused accounts. Check whether your target property is still within reach at the revised capacity.
→ You may wish to speak with a licensed mortgage broker to assess your personal circumstances. This is general information only. Individual circumstances vary and scheme details change regularly. Verify current eligibility, caps, and terms with official sources before making decisions. Speak with a licensed mortgage broker for advice tailored to your situation. All loans are subject to lender approval.
Sources: RBA, Monetary Policy Decisions 2026 (rba.gov.au); APRA, Letter to ADIs — Mortgage Serviceability, October 2021; JMD Mortgages, Serviceability Buffer Explained, March 2026.
