The Property Couch 587 | Higher Interest Rates: Fix, Float or Hold Your Nerve?
Mar 5, 2026
Kirsty "KD" Dunphey, experienced Tasmanian mortgage broker known for practical lending and cash-flow tips. Luke Oxenham, mortgage strategist who helps investors and owner-occupiers with borrowing and structuring. They tackle rising rates, borrowing power and mortgage jail. They compare fixing vs staying variable, explain offsets/redraw and stress testing, and discuss investor risks and timing in tight markets.
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3% Buffer Creates Mortgage Jail Risk
- Lenders typically add a 3% serviceability buffer when assessing borrowers, which can create 'mortgage jail' if rates later rise.
- Luke explains borrowers sometimes can't refinance because assessed capacity (with buffer) shows they can't afford the same loans.
Improve Capacity By Cutting Credit Limits
- Do reduce or adjust credit limits and consolidate non‑mortgage debt to improve borrowing capacity.
- Luke and KD give an example: cutting a $15,000 credit card to $5,000 unlocked about $80,000 extra borrowing power.
Fix Part Of The Loan If You Need Certainty
- Do consider fixing part of your loan for certainty but expect trade‑offs: reduced redraw/offset and less flexibility.
- KD warns fixed offers often come at ~0.25% above current variable and feel‑based comfort can drive the decision.
