Mortgage repayments could rise by almost $500 a month if RBA hikes again tomorrow

The average home loan borrower could be paying almost $500 extra a month on their mortgage in total, if the RBA hikes by 0.50 percentage points tomorrow.

The RBA has already increased the cash rate to 1.35 per cent. Another double hike tomorrow would see it rise to 1.85 per cent.

For someone with a $500,000 debt at the start of May, with 25 years remaining, the total increase across the four hikes would be $472.

That’s like buying a new washing machine, every single month.

Potential impact of 0.50% hike tomorrow

Source: RateCity.com.au. Based on an owner-occupier paying principal and interest with 25 years remaining. Starting rate is the RBA average existing owner-occupier variable rate of 2.86% and assumes banks pass the cash rate hikes on in full.

RateCity.com.au research director, Sally Tindall, said: “Some borrowers may now be hitting the panic button as the rate hikes start to snowball.”

“Finding an extra $500 a month to cover the mortgage will be a struggle for many families who are already juggling rising grocery and petrol costs,” she said.

“With inflation now set to rise to 7.75 per cent and several more cash rate hikes in the pipeline, many households will need to bunker down for the next six to 12 months.

“If the cash rate gets to 3.35 per cent, as forecast by Westpac and ANZ, the average borrower could soon be on a variable interest rate that’s over 6 per cent. That’s going to hurt families who have large debts compared to their incomes.

“However, there are no guarantees the RBA will go this high or stay this high. Westpac is now predicting the cash rate could drop in 2024, however, any cuts are likely to be moderate to bring the cash rate to a neutral standpoint.

“The rapid rise to the cash rate, and the increasingly gloomy forecasts, have Australia’s property market rattled.

“We are already seeing significant drops to house prices in key property hotspots such as Sydney, Melbourne and Hobart, as would-be buyers hit the pause button to see how the chips fall.

“If the RBA hikes again tomorrow, it’s possible there may soon be no lenders with variable rates under 3 per cent. This is a stark change from just 12 months ago, when 113 lenders were offering variable rates under 3 per cent.

“If these rate hikes have got you scrambling, don’t panic, but more importantly, don’t put your head in the sand.

“Put your monthly expenses under the microscope and see where you can get better deals.

“Haggling with your lender for a lower mortgage rate, or refinancing to a different lender, can help take the pressure off,” she said.

Lowest advertised variable rates on RateCity.com.au

(from lenders who have announced July RBA hikes)

Source: RateCity.com.au Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.

Big four bank: lowest variable rates

Source: RateCity.com.au. Rates are for owner-occupiers paying principal and interest. Some LVR requirements apply.  

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