If house loan interest rates increase by 1%, how much more will you have to pay in house loan payments?
Last updated: 6 Aug 2025
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Home Loan Interest Rates Rise: When the policy interest rate is adjusted, this is bad news for anyone currently paying off a home loan or planning to purchase a home with a bank loan. Every 1% increase in the policy interest rate increases the total home loan payment burden by approximately 7%, resulting in higher monthly payments or a longer repayment period for homebuyers.
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Why are home loan interest rates rising?
Most financial institutions offer home loan packages with a fixed interest rate for the first three years, such as 3.5% per year. From the fourth year onward, the interest rate is usually floating, such as the MRR-1. This means that your interest rate from the fourth year onward will be based on the current MRR.
Although each bank sets a different MRR, the MRR is affected by many factors, such as deposit interest rates, inflation, and the policy interest rate set by the Monetary Policy Committee (MPC) of the Bank of Thailand. If the MRR is raised, it usually causes each bank's MRR to increase accordingly.
As of April 10, 2024, the Monetary Policy Committee (MPC) voted 5 to 2 to maintain the policy interest rate at 2.50% per annum.
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How much will the mortgage payment increase when interest rates rise?
As mentioned, the MRR will affect mortgage borrowers as they enter the year when the bank sets a floating interest rate. Naturally, the higher the interest rate, the higher the mortgage payment. However, how much higher the mortgage payment will be, can be seen in the following example.
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Reduce mortgage interest by refinancing
If you are currently paying off your mortgage and interest rates are rising, you may choose to refinance (but you must have been paying off your mortgage for at least three years). This will help you breathe easier and reduce your interest rate (see the calculation and comparison of whether refinancing is a good idea). Most often, if you are a good debtor with consistent payments, the new bank, or the same bank, will offer a loan package with a lower interest rate than the previous one.
However, it is important to carefully study the details to determine whether the new package offers better value. Overall, you will pay lower interest over the repayment period. And don't forget to calculate the costs of refinancing, such as appraisal fees, 1% mortgage registration fees, etc., before making your decision.
___________________________________________
See examples and read more details at DD Property: https://bit.ly/4aTLphD
___________________________________________
Why are home loan interest rates rising?
Most financial institutions offer home loan packages with a fixed interest rate for the first three years, such as 3.5% per year. From the fourth year onward, the interest rate is usually floating, such as the MRR-1. This means that your interest rate from the fourth year onward will be based on the current MRR.
Although each bank sets a different MRR, the MRR is affected by many factors, such as deposit interest rates, inflation, and the policy interest rate set by the Monetary Policy Committee (MPC) of the Bank of Thailand. If the MRR is raised, it usually causes each bank's MRR to increase accordingly.
As of April 10, 2024, the Monetary Policy Committee (MPC) voted 5 to 2 to maintain the policy interest rate at 2.50% per annum.
___________________________________________
How much will the mortgage payment increase when interest rates rise?
As mentioned, the MRR will affect mortgage borrowers as they enter the year when the bank sets a floating interest rate. Naturally, the higher the interest rate, the higher the mortgage payment. However, how much higher the mortgage payment will be, can be seen in the following example.
___________________________________________
Reduce mortgage interest by refinancing
If you are currently paying off your mortgage and interest rates are rising, you may choose to refinance (but you must have been paying off your mortgage for at least three years). This will help you breathe easier and reduce your interest rate (see the calculation and comparison of whether refinancing is a good idea). Most often, if you are a good debtor with consistent payments, the new bank, or the same bank, will offer a loan package with a lower interest rate than the previous one.
However, it is important to carefully study the details to determine whether the new package offers better value. Overall, you will pay lower interest over the repayment period. And don't forget to calculate the costs of refinancing, such as appraisal fees, 1% mortgage registration fees, etc., before making your decision.
___________________________________________
See examples and read more details at DD Property: https://bit.ly/4aTLphD
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