How interest rate rises could affect you

Key takeaways It’s important to remember that interest rate increases are gradual, and while uncomfortable now, they will help to control rising inflation Interest rate rises can affect your super balance depending on how your retirement savings are being invested When reviewing your finances, consider building a buffer for further rate increases that might affect your mortgage repayments and speak to a financial adviser.

With interest rates increasing for the first time in many years, its effects will be felt by all Australians, not just those paying off their homes.

But it’s important to remember that interest rate increases are gradual, and while uncomfortable now, they will help to control rising inflation.

In this article we address how interest rate increases may affect you, depending on your circumstances, and possible ways to manage it. 

Super members and retirees

Super members

Interest rate rises can affect your super balance depending on how your retirement savings are being invested.

As opposed to increasing like a bank account that’s paid a constant interest rate, the value of your super changes in line with the assets of the investment options in which your super is invested. So, it can go up and down.

While this can be unsettling, it isn’t necessarily a cause for concern if you’re a long-term investor who’s still some years from retirement. From what we’ve seen in the past, sharemarkets bounce back eventually.

Making changes to how your super’s invested based on short-term volatility may therefore increase the risk that your super balance fails to meet your retirement goals.


As for retirees, if their retirement savings are invested in defensive assets–such as fixed interest and cash–they may see an improvement in their returns over the longer term. 

Homeowners and potential homeowners


Unfortunately for homeowners paying off a variable interest rate loan, they will see an increase in their mortgage repayments when interest rates rise.

In an environment where interest rates look to be rising, you may want to consider fixing at least some portion of your mortgage. This may also give you a better handle on your finances each month to budget effectively for your other living expenses.

Prospective buyers

For people looking to get into the property market, the rate rises may provide greater opportunity as it often slows the growth of property prices. This is due to there being less demand and more supply.

It may however, impact your borrowing capacity as you’ll need to show you can repay the loan based on the higher interest rate. 



In terms of the impact on sharemarkets, from what we’ve seen in the past, even if investors experience volatility in the short-term, markets eventually recover with time.

Rate rises can therefore provide investors with more opportunity to buy while prices are low.


Rising interest rates can slow down the property market by reducing demand. They can also reduce the borrowing capacity for investors and borrowers.

Fixed interest investments

For those holding fixed interest investments such as government and corporate bonds, interest rate increases may reduce the value of bonds. This is because the capital value of  bonds generally fall as interest rates rise.

Australian dollar

When interest rates fall, the Australian dollar usually weakens making Australian commodities and exports more affordable for offshore buyers.

But generally, when rates rise the Australian dollar strengthens. This is because overseas investors are attracted to a higher yield, driving up demand for Australian currency. 


Interest rate rises are generally good news for people with savings or using savings to supplement another source of income such as a pension.

Term deposits offer higher returns too and can help to reduce volatility in an investment portfolio as they’re less sensitive to interest rate changes. 

How you can prepare yourself for future rate increases

When reviewing your finances, consider building a buffer for further rate increases that might affect your mortgage repayments.

It may also be worth looking at consolidating your debts and renegotiating your current interest rates to protect yourself from future increases.

When it comes to your super, see if you’re still happy with the investment options you’re invested in. If not, consider speaking with a financial adviser.

Their job is to help you with every aspect of your financial life—savings, insurance, tax, debt—while keeping you on track to achieve your goals.

More importantly, they can answer questions like:

  • What age can I stop working and retire?
  • What strategies can I use to build my wealth?
  • How can I pay off my mortgage faster and reduce debt?

Important information and disclaimer

This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at May 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.

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Disclaimer: The information contained in this document is based on information believed to be accurate and reliable at the time of publication. Any illustrations of past performance do not imply similar performance in the future. To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of information contained in this newsletter. This information is of a general nature only. It is not intended as personal advice or as an investment recommendation, and does not take into account the particular investment objectives, financial situation and needs of a particular investor. Before making an investment decision you should read the product disclosure statement of any financial product referred to in this newsletter and speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives, financial situation and needs.