Buying your first home is one of life’s biggest milestones — but when interest rates climb, it can also feel daunting. Rising rates change how much you can borrow, how quickly you can repay, and how confident you feel about the market. The good news? Even in a high-interest environment, first home buyers can still take smart, strategic steps toward owning their dream home.
1. Understand How Interest Rates Affect You
When rates rise, your borrowing capacity often falls. Lenders calculate your repayment ability using a buffer rate (usually around 3% higher than the current rate), meaning you might qualify for a smaller loan than last year. Instead of focusing solely on maximum borrowing power, focus on comfortable borrowing power — what fits your lifestyle, savings goals, and safety net.
2. Prioritise Loan Features Over the Headline Rate
It’s tempting to chase the lowest interest rate on the market, but the smartest buyers look at loan flexibility. Offset accounts, redraw facilities, and the ability to make extra repayments can save you more money over time than a slightly lower fixed rate. A mortgage broker can help you compare these options across lenders and structure a loan that adapts to you.
3. Reassess Your Budget and Savings Plan
Rising interest rates also affect affordability beyond repayments — think insurance premiums, energy costs, and groceries. Building a buffer into your budget is essential. Aim for at least three months of mortgage repayments saved as a safety net. It might sound conservative, but it’s what separates confident buyers from stressed ones.
4. Explore Government Incentives and Low-Deposit Options
Even in tighter markets, first home buyers can access valuable support. The First Home Guarantee Scheme, stamp duty concessions, and First Home Super Saver Scheme can reduce your deposit hurdle dramatically. Combined, they can cut years off your savings timeline — and your broker can confirm which programs you qualify for.
5. Think Long-Term — Not Just the Next 12 Months
Interest rates move in cycles. While they may seem high today, they often stabilise or decline over time. The key is to choose a loan structure that balances short-term protection with long-term flexibility — for instance, a split loan (part fixed, part variable) that gives you certainty and control.
Buying your first home in a high-rate market isn’t about waiting for the perfect moment. It’s about preparation, discipline, and guidance. The best opportunities often arise when others hesitate.
Where to from here?
Feeling uncertain about where to start? You don’t have to figure it out alone. Contact Chase today for personalised advice and access to lenders who understand first home buyers. Let’s turn high rates into smart opportunities.