Guide
Borrowing capacity in 2026: how much less you can borrow after the rate rises
The RBA has lifted the cash rate five times in 2026, from 3.60% to 4.85% on 3 November 2026. Each rise cuts how much a lender will lend. Here is roughly how much, for five income levels, and what you can do about it.
By Mossy Taheri, licensed buyer’s agent · Updated
The short answer
After five rate rises in 2026 took the cash rate to 4.85%, a single person on $120,000 can borrow roughly $552,000, down from about $615,000 in January 2026: about $63,000 less. Every income level has lost a similar share.
Borrowing capacity, then and now
Illustrative maximum loan for a 30-year principal and interest loan, with no other debts and no rental income counted. January 2026: loan rate 6.10%. Now: 7.35%.
| Borrower | January 2026 | Now | Change |
|---|---|---|---|
| Single, $90,000 | $405,000 | $364,000 | −$41,000 |
| Single, $120,000 | $615,000 | $552,000 | −$63,000 |
| Single, $150,000 | $813,000 | $731,000 | −$82,000 |
| Couple, $90,000 + $90,000 | $971,000 | $872,000 | −$99,000 |
| Couple, $150,000 + $100,000 | $1,448,000 | $1,301,000 | −$147,000 |
Why rate rises cut borrowing capacity
Lenders don’t test your repayments at the loan’s actual rate. Under APRA’s rules, they add a buffer of at least 3 percentage points, so a 7.35% loan is assessed at about 10.35%. Each 0.25-point rise in the cash rate that banks pass on lifts that assessment rate too, so the same income supports a smaller loan.
The RBA moved the cash rate from 3.60% to 4.85% across 2026; the latest rise was on 3 November 2026.
How to borrow more
- Count the rent: for an investment property, lenders usually include most of the expected rent as income.
- Use the equity in your home for the deposit; see using home equity to invest.
- Close or reduce other debts, including unused credit card limits, which lenders treat as if they were fully drawn.
- Lower your regular spending before you apply; lenders read your bank statements.
- Add a co-borrower, or choose a lender whose policy suits your income (for example, bonuses or self-employment).
- Talk to a mortgage broker: lenders' calculators can differ by tens of thousands of dollars.
Then check what the loan costs to hold with our cash flow calculator and how far rent covers repayments in each capital.
How we worked it out
- Income after 2026-27 resident tax and the 2% Medicare levy (ATO).
- Living expenses of $2,600 a month for a single person and $3,900 for a couple with no children. These are our round assumptions; lenders use the higher of your declared spending and a benchmark.
- All remaining income goes to repayments, tested at the loan rate plus 3 points, over 30 years. No other debts, no rent counted.
- Loan rate now: 7.35%, Canstar's 6.84% average variable rate (27 October 2026) plus the November rise and 0.25 for investor pricing. January 2026: that rate less the 2026 rises.
These are rough estimates for comparison only, not what any lender will offer you. General information only, not personal financial or credit advice. Updated 6 November 2026; we update this page after each RBA decision.
- ABC News, RBA lifts the cash rate to 4.85%, 3 November 2026
- Savings.com.au, big four banks pass on the rise from 13 November 2026
- Australian Broker News, Canstar average variable rate 6.84%, 27 October 2026
Cite this page: Rising Returns, “Borrowing Capacity After the November 2026 Rate Rise”, updated 6 November 2026, https://risingreturns.com.au/borrowing-capacity/
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Book a free discovery callBorrowing capacity: common questions
How much has borrowing capacity fallen in 2026?
On our illustrative numbers, about 10%. A single person earning $120,000 could borrow about $615,000 at the start of 2026 and about $552,000 now, a fall of about $63,000. Your own figure depends on your debts, expenses and lender.
How do banks work out how much I can borrow?
They take your income after tax, subtract your living expenses and existing debts, and check that what's left covers the new loan's repayments at an assessment rate. Under APRA's rules, that rate is at least 3 percentage points above the loan's actual rate.
Does rental income increase my borrowing capacity?
Yes. For an investment property, most lenders count part of the expected rent, often around 70% to 80% of it, as income. That lifts capacity compared with the figures here, which leave rent out.
How can I increase my borrowing capacity?
Pay down or close other debts, including credit card limits you don't use, cut regular spending in the months before you apply, add a co-borrower's income, or choose a lender whose policy suits your income type. A mortgage broker can compare lenders' calculators for you.
Will borrowing capacity go back up if rates fall?
Yes. A fall in the cash rate that lenders pass on lowers both the loan rate and the assessment rate, so capacity rises. We update this page after each RBA decision.
General information only. It doesn’t consider your personal circumstances and isn’t financial, tax, credit or legal advice. Speak to a licensed professional before you act.