Rate Stress Test Calculator
See how your mortgage repayments change if interest rates rise by 0.25% to 3.00%. Test your APRA serviceability buffer.
Why Stress-Testing Your Mortgage Rate Matters
How it works
A rate stress test shows what your mortgage repayments would look like if interest rates rise. Australian variable-rate home loans are directly affected by Reserve Bank of Australia (RBA) cash rate movements — when the RBA raises the cash rate, lenders pass the increase through to variable mortgage rates, often within days. Between May 2022 and November 2023, the RBA raised the cash rate from 0.10% to 4.35%, adding roughly $1,300/month to repayments on a $600,000 loan.
When you apply for a home loan, APRA requires your lender to assess whether you can afford repayments at a rate at least 3 percentage points above the product rate. This is the serviceability buffer. If you're offered a rate of 6.2%, the lender must confirm you can service the loan at 9.2%. The buffer exists precisely because rates can move significantly during a 25–30 year loan term.
This calculator lets you test specific rate increases — from +0.25% (a single RBA move) up to +3.00% (the full APRA buffer) — so you can see the dollar impact on your repayments and decide how much headroom you have in your budget. It's particularly important to stress-test if you're on a fixed rate that's about to expire, as the variable rate you revert to could be materially higher than your current fixed rate.
When to use this calculator
- You want to see the dollar impact on your repayments if the RBA raises rates by one or more increments
- You're buying a property and want to check you can still afford repayments at the APRA +3% buffer rate
- Your fixed-rate period is expiring and you want to understand repayments at current variable rates — plus a further buffer
- You want to calculate the maximum rate your budget can handle before repayments exceed a specific percentage of your income
- You're comparing a fixed vs variable loan and want to understand the worst-case variable scenario
Key concepts
- RBA cash rate
- The interest rate the Reserve Bank of Australia sets for overnight lending between banks. Changes to the cash rate flow through to variable mortgage rates. The RBA meets on the first Tuesday of each month (except January) to decide whether to change the rate.
- APRA serviceability buffer
- APRA (the Australian Prudential Regulation Authority) requires banks to assess loan applicants at a rate at least 3 percentage points above the loan product rate. This buffer is designed to ensure borrowers can handle significant rate increases over the life of their loan. As of April 2026, the buffer remains at 3.0%.
- Mortgage stress
- A household is commonly considered to be in mortgage stress when housing costs exceed 30% of gross household income. Severe mortgage stress is sometimes defined as exceeding 40%. Stress-testing helps you identify how close you are to these thresholds under different rate scenarios.
- Fixed-rate cliff
- When a fixed-rate term expires, borrowers revert to the lender's standard variable rate — which can be significantly higher than the original fixed rate. A large wave of Australian fixed-rate loans taken at 2–3% during 2020–2021 have already reverted to variable rates above 6%, resulting in payment increases of $800–$1,500/month on a typical loan.
Worked example — stress-testing a $520,000 loan at 6.20%
Priya has a $520,000 variable-rate mortgage at 6.20% over 28 years remaining. Her current monthly repayment is $3,383. She earns a gross household income of $130,000/year ($10,833/month).
| Rate scenario | Interest rate | Monthly repayment | Increase | % of gross income |
|---|---|---|---|---|
| Current | 6.20% | $3,383 | — | 31.2% |
| +0.50% | 6.70% | $3,553 | +$170 | 32.8% |
| +1.00% | 7.20% | $3,728 | +$345 | 34.4% |
| +2.00% | 8.20% | $4,091 | +$708 | 37.8% |
| +3.00% (APRA buffer) | 9.20% | $4,471 | +$1,088 | 41.3% |
At the current rate, Priya is already at 31.2% of gross income — just above the 30% mortgage stress threshold. A 1% rate rise pushes her to 34.4%, and the full APRA buffer scenario would put her at 41.3% — well into severe mortgage stress territory. This analysis suggests it may be worth building a larger buffer in the offset account or exploring a partial fixed-rate split to protect against further increases.
Rate Stress Test FAQ
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