RBA Rate Hike Set to Slam Australian Borrowers with Higher Mortgage Repayments

Another rate hike is looming on the horizon for Australian mortgage holders as the Reserve Bank of Australia (RBA) is expected to increase interest rates to a 15-year high. According to Sally Tindall, data insights director at financial comparison site Canstar, a 25-basis point increase in the cash rate would add $91 a month to a typical $600,000 mortgage.

At 4.6 percent, the cash rate is set to be the highest experienced by a generation of borrowers, lifting the average owner-occupier variable rate to 6.49 percent if lenders fully pass on the increase. This means that across four rate rises this year, borrowers will have to fork out an extra $364 a month compared to what they were paying at the start of the year.

RBA governor Michele Bullock has suggested that unemployment needs to be higher to curb inflation, sparking a furious response from union groups and social service organizations. Treasurer Jim Chalmers, however, pushed back on Bullock's comments, stating that it is possible to have lower unemployment than 5 percent while still addressing inflation.

The cumulative impact of rate hikes will undoubtedly leave borrowers hundreds of dollars poorer, with Tindall warning that the true pain lies in the long-term consequences. As the RBA board meeting comes to a close, the fate of Australian mortgage holders hangs in the balance.