Not quite. Because while rents are rising, so are interest rates on investment loans. The key question isn’t just “how much rent can I get?” — it’s “which investment loan product gives me the best net return after costs?”
Let’s break down what the latest rental growth data means for your property loan comparison, and how you can use this moment to your advantage.
The Rental Growth Snapshot: What the Numbers Say
According to fresh data from Cotality (released July 10, 2026), national rents accelerated to 8.4% annual growth in June 2026. That’s up from 7.1% in the previous quarter. The acceleration is broad-based — capital city rents rose 9.2%, while regional areas saw a still-strong 6.5% increase.
To put that in perspective: if you owned a property renting for $500 a week last June, you’d now be collecting around $542 per week. That extra $42 weekly might not sound life-changing, but over a year it’s $2,184 — enough to cover several months of interest payments on a $500,000 loan at 6.5%.
But here’s where comparison matters. Not all investment loans are created equal. Some come with offset accounts that let you park extra rent to reduce your interest bill. Others offer fixed rates that lock in your costs while your income grows. The rental growth data tells us the income side is improving — but your loan structure determines how much of that improvement stays in your pocket.
Three Ways to Compare Investment Loans When Rents Are Rising
1. Compare the “Effective Rate” After Rent Offsets
Many investors focus solely on the headline interest rate. But when rents are rising, the real metric to watch is your effective interest rate after rent-based offsets. Some lenders now offer products where you can link your rental income account directly to your loan’s offset facility.
Let’s compare two products:
- Loan A: 6.35% variable rate, no offset account, no rental income linking.
- Loan B: 6.55% variable rate, 100% offset account, allows direct deposit of rental income.
At first glance, Loan A seems cheaper. But if your rent is $542 per week ($28,184 annually) and you park that in Loan B’s offset, you reduce your average daily loan balance by that amount. On a $500,000 loan, that saves you about $1,832 in interest per year at 6.55% — effectively dropping your rate below 6.35%.
The takeaway: Don’t just compare rates. Compare how each loan lets you use rising rental income to reduce your interest cost. ozLoan’s investment loan comparison guide walks through this calculation step by step.
2. Compare Fixed vs. Variable When Your Income Is Growing
Rental growth acceleration creates an interesting dilemma: should you fix your loan rate now, or stay variable to benefit from potential future rate cuts?
Consider two scenarios with current market data:
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Fix at 6.20% for 3 years: Your monthly interest cost is locked at $2,583 on a $500,000 loan. Your rent grows from $542 to an estimated $590 per week over three years (assuming 8.4% annual growth). Your net rental surplus grows from $1,220 to $2,240 per year.
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Stay variable at 6.45%: Your initial cost is $2,688 per month. But if the RBA cuts rates by 0.50% over the next 18 months, your cost drops to $2,479. Meanwhile, your rent keeps climbing.
The variable option gives you more upside if rates fall — but the fixed option gives you certainty while your income expands. There’s no one-size-fits-all answer, which is exactly why comparing loan features matters. Check out ozLoan’s fixed vs variable rate comparison for a detailed breakdown.
3. Compare Lenders’ “Rental Income Assessment” Policies
Here’s a hidden factor many investors miss: lenders assess your borrowing capacity differently when rents are rising.
Some lenders use a “stress rate” of 3% above your actual rate to calculate your ability to repay. Others use a flat 7.5% assessment rate regardless of your loan’s actual rate. And crucially, lenders vary in how much rental income they “recognise” — typically 75% to 80% of expected rent.
With rents up 8.4% annually, a lender that recognises 80% of a $542 weekly rent ($433.60) could approve you for a larger loan than one that uses 75% ($406.50). Over a 30-year loan, that difference in assessed income could mean $30,000 to $50,000 more in borrowing capacity.
The comparison action: When shopping for an investment loan, ask each lender: “What percentage of rental income do you use in your serviceability calculation?” and “What assessment rate do you apply?” The answers can dramatically change how much you can borrow — and which property you can afford.
Real Case Study: How One Investor Compared Loans to Maximise Yield
Let’s make this concrete. Sarah is a 35-year-old investor in Brisbane. She bought a three-bedroom townhouse in Chermside in January 2025 for $650,000. Her original rent was $620 per week. By July 2026, that rent has climbed to $672 per week — an 8.4% increase matching the national trend.
Sarah’s original loan was a 6.50% variable product with no offset. Her monthly interest cost: $3,542. Her monthly rent: $2,912. She was negatively geared by $630 per month.
Now, with higher rent, her monthly income is $2,912 — but she’s still negatively geared because her interest costs haven’t changed. She decides to refinance.
She compares three options using ozLoan’s comparison tools:
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Refinance to 6.20% fixed for 2 years — monthly interest drops to $3,375. Combined with $2,912 rent, her negative gearing shrinks to $463/month.
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Refinance to 6.35% variable with 100% offset — monthly interest is $3,458. She deposits her rent into the offset, reducing the average balance. Over a year, she saves $1,200 in interest, bringing her effective cost to $3,358/month — making her only $446 negatively geared.
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Refinance to 6.45% variable with a “rental income direct debit” feature — a niche product where the lender automatically credits 80% of her rent to the loan each week. This reduces her principal faster and cuts her interest bill by an estimated $1,800 annually.
Sarah chooses option 3 because it offers the best long-term principal reduction. The key lesson: she didn’t just look at rates — she compared how each loan product interacted with her rising rental income.
What This Means for Your Borrowing Power
The rental growth acceleration has a direct impact on how much you can borrow for your next investment property. Here’s the math:
Assume you earn $120,000 per year and want to buy a $600,000 investment property with a $500,000 loan. A lender using 80% of rent at $542/week adds $22,547 in annual “assessable rental income” to your application. At a 7.5% assessment rate, this supports about $300,000 in additional borrowing capacity.
But a different lender using 75% of the same rent only adds $21,138 in assessable income — supporting about $282,000. That’s an $18,000 difference in borrowing capacity, all because of how the lender treats rental income.
With rents rising, this gap widens. If rental growth continues at 8.4%, next year’s rent on the same property would be $587/week. The lender using 80% recognition would give you $24,419 in assessable income — $2,000 more than this year. That extra $2,000 in assessed income can make the difference between qualifying for a second property or not.
The comparison tip: When comparing lenders, explicitly ask for their rental income recognition percentage. It’s not always advertised. Some lenders are more generous than others, and in a rising rent environment, that generosity can translate into real borrowing power.
The Yield Equation: Don’t Forget Costs
Higher rents improve your gross yield — the rent divided by property value. For Sarah’s Chermside townhouse, gross yield improved from 4.96% ($620 x 52 / $650,000) to 5.37% ($672 x 52 / $650,000). That’s a nice bump.
But net yield — after loan costs, strata fees, maintenance, and vacancy — is what really matters. And loan costs are the biggest variable.
Here’s a quick comparison of net yields under different loan scenarios, all using Sarah’s data:
- Original loan (6.50%, no offset): Net yield = 3.12% (after $20,000 annual interest, $5,000 other costs, $34,944 rent)
- Option 1 (6.20% fixed): Net yield = 3.41%
- Option 3 (6.45% with rental direct debit): Net yield = 3.58%
The difference between the best and worst loan is 0.46% in net yield. On a $650,000 property, that’s $2,990 per year — real money that compounds over time.
The bottom line: Rental growth is great, but your loan choice determines how much of that growth you actually keep. Comparing loans on features beyond rate — especially those that help you use rising rent to reduce interest — can meaningfully boost your investment returns.
Frequently Asked Questions
Q: Should I refinance now because rents are rising, or wait for rates to drop?
A: It depends on your current loan structure. If you’re on a high variable rate (above 6.50%) with no offset, refinancing now to a product with a competitive rate and rent-offset features can lock in immediate savings. Waiting for rate cuts is speculative — the RBA’s next move is uncertain. Use ozLoan’s refinance calculator to compare your current loan against top offers.
Q: How much rental growth do lenders assume when assessing my application?
A: Lenders typically use the current rent or a slightly lower amount, not projected growth. However, some lenders may apply a “rental income haircut” of 20-25% to account for vacancies and costs. With rents rising 8.4% annually, the actual rent you’ll collect in year two will likely exceed what the lender assessed — giving you a buffer.
Q: Can I use rising rents to qualify for a larger investment loan?
A: Yes, but indirectly. Higher rents increase your assessable income, which can boost your borrowing capacity. However, lenders also consider your existing debts, living expenses, and the stress rate. The best approach is to compare multiple lenders’ serviceability calculators — some are more generous with rental income recognition than others.
Q: Does rental growth affect interest-only loan terms?
A: Not directly, but it changes the economics. If you’re on an interest-only loan, rising rents improve your cash flow without reducing your principal. This can make interest-only loans more attractive in a rising rent environment — but you still need a plan to eventually pay down the loan. Compare interest-only vs principal-and-interest options on ozLoan’s loan comparison page.
Sources
- Cotality, “National Rental Growth Accelerates to 8.4% Annually in June 2026,” July 10, 2026.
- Reserve Bank of Australia, “Monetary Policy Decisions and Cash Rate Target,” 2026.
- Australian Bureau of Statistics, “Consumer Price Index, Australia — Rental Component,” June 2026.
- CoreLogic, “Rental Market Update — Capital City vs Regional Rents,” July 2026.
- ozLoan, “Investment Loan Comparison Guide,” 2026. https://ozloan.net/guides/investment-loan-comparison
*This article provides general information and comparison insights only. It does not constitute financial advice. Always consult a qualified mortgage broker or