By Steve Chin · April 2026 · 5 min read
The hidden cost squeeze
Home and building insurance premiums have increased 20-30% over the past two years across Australia. For Adelaide homeowners, annual premiums of $2,500-$4,000 are now common - up from $1,500-$2,500 just a few years ago. This matters for your home loan in two ways.
First, higher insurance is a genuine cost of ownership that increases your total housing expense. Second, lenders include insurance in their serviceability assessment - so higher premiums directly reduce how much you can borrow.
Why premiums are rising
Increased natural disaster claims, rising construction costs (which push up rebuild values), and reinsurance market pressures are all driving premiums higher. This is not a temporary spike - the industry expects elevated premiums to persist.
What you can do
Shop around - premiums for the same property can vary by 40% between insurers. Increase your excess if your cash reserves allow it. And if your total housing costs are becoming stretched, a rate review can offset the insurance increase by reducing your loan repayment.
If rising costs are squeezing your budget, book a chat - we will review your loan and see if a better rate can offset the increase.
Frequently asked questions
Do lenders factor in insurance costs?
Yes. Building insurance is mandatory on all mortgaged properties and lenders include it in their expense assessment. Higher premiums mean higher assessed expenses, which reduces your borrowing capacity. Some lenders also verify your insurance is adequate before settlement.
How can I reduce the impact?
Shop around for insurance - premiums vary significantly between providers for the same property. Increase your excess to lower premiums. Ensure you are not over-insured by getting an accurate rebuild cost assessment. And choose a lender whose expense model treats insurance costs most favourably.
Find out if a better rate is out there
Leave your details and Steve will check your rate and lender against the lenders we use before he calls, so the call starts with an answer, not questions.
Rather talk it through? Book a free 15 minute call with Steve or ring 08 8270 5138.