We’ve all been watching interest rates rise steadily over the last couple of years.

Sure, they’re on the way down now, but many homeowners are still feeling the pressure and there’s a group that’s been hit especially hard: new mortgage holders.

A recent analysis by PropTrack has put some eye-watering numbers behind what we already suspected: borrowing now is significantly more expensive than it was just a couple of years ago.

If you’re taking out a new mortgage today, you’re likely paying almost 50% more in repayments than someone who borrowed the same amount just two and a half years ago.

Let’s look at what this really means, and more importantly, what seasoned investors like us should be thinking and doing in light of this.

How much more are people paying?

According to PropTrack’s modelling, a borrower taking out a $600,000 loan today is forking out $1,284 more each month compared to someone who took out that loan in November 2021.

That’s a staggering 48% increase in monthly repayments—up from $2,688 to $3,972 a month.

And it’s not just big loans feeling the squeeze.

Even a $450,000 mortgage is costing $963 more a month than it would have in late 2021.

That’s the reality of a 4.25 percentage point increase in the cash rate, arguably the fastest and steepest tightening cycle in modern Australian history.

How this affects the broader property market

Now, here’s the thing: we’ve just seen the biggest jump in mortgage costs in decades… yet property values in many parts of the country have remained resilient.

In fact, property values are still climbing in all capital cities of Australia.

Why?

Because property values aren’t just driven by interest rates, they’re driven by supply and demand, population growth, employment, and consumer confidence.

And despite higher borrowing costs, demand remains strong, particularly in our major capital cities, where immigration and housing undersupply continue to fuel competition.

What we are seeing, though, is a shift in buyer behaviour.

First-home buyers are being squeezed out or are having to compromise more than ever.

Upgraders are thinking twice.

Investors are being more selective, and rightly so.

What smart investors are doing differently now

If you’ve already got an established portfolio, you’re likely sitting on significant equity.

You’re probably not borrowing at today’s full 6%-plus rates.

But if you are looking to expand, or if you’ve got loans rolling off fixed rates, it’s time to think strategically.

Here’s what the savvy investors are doing:

1. Refinancing smartly

Even with higher rates, there are still competitive offers out there.

Many investors are leveraging their good credit and equity to negotiate better terms or switch lenders.

2. Prioritising cash flow

Cash flow management is key in a high-interest environment.

You probably know that cash flow keeps you in the game, but it’s really capital growth that gets you out of the rat race.

That means choosing the right property types (think high-demand, low-maintenance), considering rent increases where justified, and using offset accounts or redraw facilities wisely.

3. Buying where it still makes sense

Not all markets are created equal.

The gap between house and unit values has opened up new opportunities, and select locations still offer strong long-term capital growth potential, even if yields are tighter in the short term.

4. Focusing on fundamentals

Rather than speculating on interest rate movements, the best investors are doubling down on fundamentals: demographics, infrastructure, scarcity, and long-term value-add potential.

Should you be worried about affordability pressures?

Affordability is undoubtedly an issue for new entrants.

But for those of us playing the long game, this is just another cycle.

Rates will keep falling as inflation now seems under control and within the RBA’s target range.

In the meantime, while the current market conditions are creating barriers to entry, ironically this makes well-located investment-grade properties even more valuable.

There’s less competition for quality stock now, and that’s the window of opportunity for those who can act.

Final thoughts

The sharp rise in mortgage costs is a stark reminder of how quickly the financial landscape can change.

But it’s also a nudge for investors to stay nimble, informed, and strategic.

At Metropole, we’re not just navigating these headwinds; we’re helping our clients find the opportunities they create.

Whether it’s rebalancing a portfolio, reworking a finance strategy, or finding your next high-performing property, there’s still plenty of upside if you know where to look.

If you’re feeling the squeeze or wondering how to adapt your investment strategy in this higher-rate environment, now’s the time to get proactive.

About Aska Soo
Aska is a passionate and driven professional with many years of experience as a property consultant helping clients achieve their financial goals through property acquisition. She has consulted clients around Australia by reviewing, educating, and advising clients about their financial situation and what they need to achieve their end goal of being financially free.