How much will the May rate hike actually cost your mortgage?

Three RBA hikes in five months have added 0.75 per cent to the cash rate. Most major lenders pass the cash-rate move through to variable home loan rates within a fortnight. The dollar impact for a borrower depends on three things: how big the loan is, how much of the term remains, and which rate you are coming off. The figures below give the order of magnitude on a typical 25-year owner-occupier loan.

How much extra per month, by loan size?

• On a $400,000 loan: the May hike alone adds about $61 a month. The cumulative 0.75 per cent of 2026 hikes adds about $186 a month, $2,232 a year.
• On a $600,000 loan: May adds $91 a month; the cumulative add is $272 a month, $3,264 a year.
• On a $700,000 loan: May adds $107 a month; the cumulative add is $317 a month, $3,800 a year.
• On a $800,000 loan: May adds $122 a month; the cumulative add is $363 a month, $4,360 a year.
• On a $1,000,000 loan: May adds $153 a month; the cumulative add is $454 a month, $5,448 a year.

Those increases are paid out of after-tax income. For a borrower in the 32.5 per cent marginal tax bracket, $3,800 a year of extra repayments is equivalent to about $5,630 of additional gross income. For a borrower in the 37 per cent bracket, it is closer to $6,030.

How does that compare to median income, by state?

Median household income is a useful sanity check on whether a particular repayment increase is manageable or not. NSW median household income, indexed to the start of 2026, is around $114,000 gross. A $317-a-month repayment increase on a $700,000 loan represents about 4.0 per cent of after-tax disposable income for a median NSW household. That is on top of the cumulative repayment increases since the cycle began in 2022; many borrowers are now several percentage points of disposable income deeper than they were two years ago.

Victoria and Queensland medians sit slightly below NSW; Western Australia and the ACT slightly above. The headline takeaway is the same across all states: an additional 4 to 5 per cent of disposable income redirected to interest. That is the figure to put against your household budget, not the headline 0.25 per cent.

What about borrowers rolling off fixed rates?

For a borrower whose 2021 fixed loan is now reverting to variable, the May hike is a small footnote on a much larger transition. A $600,000 loan fixed at 1.99 per cent and reverting to a 6.55 per cent variable rate sees a monthly repayment increase of about $1,300, before the May hike adds another $91. That is a $16,000 a year change in after-tax cashflow. Refinance shopping is the only useful response; the rate gap between the cheapest available variable and the major-bank average is currently 0.40 to 0.65 per cent, which on a $600,000 loan is worth $150 to $245 a month.

What can a borrower actually do this month?

1. Phone your current lender, ask for the rate available to a new customer with your loan-to-value ratio, and ask why you are not on it. Many lenders move existing customers down 0.10 to 0.30 per cent on this call alone.
2. Run a refinance scenario in our calculator with the lowest variable rate available on your LVR. If the break-even is under 18 months, switching is usually worth it. Over 36 months, usually not.
3. Review credit card limits. A $20,000 credit card limit reduces your borrowing capacity by roughly $80,000, even if the balance is zero. If you are not using the limit, ask your card issuer to reduce it.
4. If your repayment increase pushes the household budget into the red, talk to your lender about hardship arrangements before you miss a payment. ASIC requires lenders to consider hardship requests; the conversation is structured and confidential.

The May hike is one number in a longer cycle. The most useful response is to know your own number, model the next 0.25 per cent in advance, and decide what you will do if it lands. Households that have run those numbers cope better with the actual hike than households that find out at the next direct debit.