Australian mortgage holders are being urged to take action against rising interest rates, as the Reserve Bank of Australia (RBA) continues its aggressive tightening cycle. On Tuesday, the RBA raised the cash rate for the fifth time this year, bringing it to 4.85%, the highest level in 18 years. Compare the Market economics director David Koch advised households to review their expenses, starting with their mortgage, to mitigate the financial strain.
Koch recommended a 'back-to-basics' approach, suggesting families sit down together to scrutinize bills such as energy, insurance, and subscriptions. He emphasized that even small savings across multiple expenses could add up to significant amounts over time. For Australians with an average loan of $731,000, each 25 basis point rate hike adds $114 per month in repayments. The five rate increases this year have collectively raised monthly payments by $584, or $7,000 annually.
RBA governor Michele Bullock acknowledged the pain of the rate hikes, stating that Australians would likely feel like the country was in recession due to stagnant incomes and reduced spending power. 'Their spending can’t grow very quickly because their incomes aren’t growing very quickly,' she said. Meanwhile, major banks quickly passed on the rate hikes to customers, with all four major lenders confirming increases effective from November 13.
Canstar money expert Sally Tindall urged households to push back against the rate hikes, calling on the RBA and government to reconsider their approach. She argued that the current strategy was unfair and ineffective, urging borrowers to seek rate relief or hardship support from their banks. Tindall also noted that while the latest hike would not impact bank accounts until 2027, households should act now to manage their finances.