RBA Interest Rate Hike Set to Hit Mortgage Holders Hard
The Reserve Bank of Australia (RBA) is expected to raise interest rates for a fourth time in 2026, pushing mortgage holders' monthly repayments to their highest level in 15 years.
A 25-basis point increase would add $91 per month on a typical $600,000 mortgage, according to Sally Tindall from financial comparison site Canstar. This means borrowers could face an extra $364 per month compared to the start of the year due to cumulative impact of multiple rate hikes.
The cash rate is set to hit 4.6%, with the average owner-occupier variable rate potentially reaching 6.49% if lenders pass on the full increase. This would be the highest interest rate experienced by a generation of borrowers, surpassing the previous peak in October 2011.
Soaring house prices have led to a significant increase in home loan debt over the past decade, from $1.05 trillion to $2.51 trillion. RBA governor Michele Bullock's comments on unemployment needing to be between 4.5 and 5% to control inflation sparked criticism from union groups and social service sector.