The recent surge in interest rates has jolted millions of Australian borrowers, leaving them grappling with financial pressures reminiscent of earlier struggles.
The Reserve Bank of Australia (RBA) has announced its third consecutive interest rate increase, elevating the cash rate target to 4.35 percent. This decision underscores the central bank’s ongoing efforts to combat inflation, yet it poses significant challenges for households across the nation.
Nine Money editor Effie Zahos expressed concern over the impact of the latest rate adjustment, describing it as a severe setback for families. “The RBA is banking on these three rate hikes to curb inflation, but for households, this situation is nothing short of dire,” she remarked.
Homeowners are now facing increased financial burdens, with Zahos highlighting that, depending on the size of one’s mortgage, monthly payments could rise by approximately $100. Financial comparison site, Canstar, estimates that an owner-occupier with a $600,000 mortgage and 25 years left to pay will need to find an additional $91 each month due to the 0.25 percent rate hike.
“You’re looking basically, depending on the mortgage size, around $100 more for the month.”
An owner-occupier with a $600,000 mortgage and 25 years remaining at the start of this year’s hikes will need to add $91 to their minimum monthly repayments with the 0.25 per cent rise, according to estimates from financial comparison website Canstar.
The total increase across three consecutive hikes would be $272 a month.
Australians with a $500,000 mortgage over 25 years can expect to pay about $76 extra a month, while those owing $700,000 will need to pay an additional $107 a month.
Owner-occupiers with $800,000 left on their mortgage can expect to pay an extra $122 each month.
Those with $900,000 will likely need to pay an additional $137 a month.
Those owing $1 million could pay an extra $152 following today’s rate hike.
Canstar data insights director Sally Tindall said Australians who kept their mortgage repayments the same following the cash rate cuts in 2025, the repayment buffer they had built up would be essentially erased.
“While more than a year of higher repayments won’t have been in vain, the strategy will have delivered only a limited cushion against rising rates,” Tindall said.
Borrowers are also being told to prepare and calculate how much repayments will be if there are two further hikes in June and August.
Tindall recommends borrowers contact their lender and request a rate review.
“Haggling should be borrowers’ first port of call, because picking up the phone can potentially produce near-immediate relief,” she said.
“However, banks aren’t handing out discounts as freely as they were a couple of years ago.
“If your bank won’t budge when you haggle, don’t take it personally, instead, take your business elsewhere.”
Haggling can only take your rate so far. Those who want the sharpest rates are likely to have to refinance.
Borrowers should ask about hardship assistance if repayments are becoming difficult and they have already negotiated with their lender.
Independent financial advice is available from the National Debt Helpline on 1800 007 007.
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
