When will your bank hike your mortgage rate and how much could it cost you?

Last week the Reserve Bank of Australia increased the cash rate to 4.35%, marking the thirteenth hike to interest rates since April 2022.

In an already challenging environment of high inflation levels, homeowners find themselves in the crosshairs of yet another financial blow. The rising cost of living has become inceasingly more difficult, and the recent cash rate hike only adds to mounting pressure for anyone with a mortgage.

Homeowners are bracing themselves for potential financial impacts, as they could be facing paying an additional $1,815 in monthly mortgage repayments since the cash rate began rising last year.

Already, 30 lenders have announced plans to increase variable home loan rates, including the Big Four Banks. Homeowners are likely wondering when they can expect this latest increase to take effect, and how much it’ll put them out-of-pocket. 

Which lenders have increased interest rates so far? November 2023

Source: RateCity.com.au. Data accurate as of 13/11/23.

Is your lender not on the list yet? Visit our live RBA cash rate tracker page for more information, and subscribe to get notified immediately after your lender makes a rate announcement.

While Australian banks and lenders have announced that interest rate rises will come into effect following specific dates, it’s worth noting that it may take around two months for a rate hike to actually affect your mortgage repayments.

New variable rate customers may be charged higher interest from effective dates noted above, but existing customer repayments generally could take longer to change. Your home loan lender will typically send you notification letter with a notice period before your monthly repayments rise.

The time it takes for your mortgage repayments to increase will depend on your lender’s notice period but is typically 20-30 days from the date of your notification letter.

How much more will your mortgage cost you now?

RateCity has crunched the numbers on several home loan amounts to determine what your repayments could be if your lender has passed on every cash rate hike in full. 

For a homeowner on a $750,000 home loan, their repayments are now $1,815 more than they were before the first rate hike in 2022. This is the equivalent of buying a high-end smartphone or a MacBook Air every single month. 

These repayment calculations are based on a 25-year loan, at an initial interest rate of 2.86% in April 2022 - as per the RBA’s average existing customer rate at the time. 

$500,000 home loan: repayment increases from cash rate hikes

$750,000 home loan: repayment increases from cash rate hikes

$900,000 home loan: repayment increases from cash rate hikes

$1,100,000 home loan: repayment increases from cash rate hikes

Source: RateCity.com.au. Hypothetical example based on 25-year loan term and initial interest rate of 2.86%, as per the RBA’s average existing customer rate in April 2022. Assumes all rate hikes passed on. Does not factor in fees.

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