Australia's Interest Rate Hike: A Growing Burden on Households

The Reserve Bank of Australia (RBA) has raised interest rates to their highest level in 15 years, bringing the cash rate up by 0.25 percentage points to 4.6 per cent.

This increase is particularly significant because household debt has skyrocketed since 2011.

The average home loan size has more than doubled, with a current average of $731,000 compared to around $281,100 in 2011.

Economists warn that while higher interest rates will hurt households, the impact is even greater now due to rising property prices and stagnant wages.

Richard Holden, professor of economics at the University of New South Wales, noted that any given increase in interest rates has a more pronounced effect on household budgets than it did 15 years ago.