How Can Rising Interest Rates Affect Property Investors and Borrowing Capacity?
Rising interest rates may affect the cost of holding an investment property and a borrower’s overall borrowing capacity. The impact will vary depending on individual circumstances, existing debt levels, and lender policies.
When interest rates rise, lenders apply the serviceability buffer on top of the higher current rate. This can reduce the loan amount a borrower is approved for. Investors with existing properties may also find that their overall debt-to-income position changes, which can affect their ability to borrow further.
Borrowers considering whether to consolidate or expand their portfolios in a changing rate environment should seek advice from a licensed mortgage broker and a licensed financial adviser, as decisions will depend on their individual financial position.
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 advice. Investment decisions should be made in consultation with a licensed mortgage broker and financial adviser. All loans are subject to lender approval.
Sources: RBA, Cash Rate Target 2026; CoreLogic, Australian Property Investment Report 2025; APRA Quarterly Property Exposures 2024; RBA, Financial Stability Review 2024.
