Compare the Market’s Economic Director David Koch has praised the Reserve Bank of Australia for keeping interest rates on hold at Tuesday’s board meeting.
While Kochie acknowledged there were pros and cons on either side of the interest rate coin, he described today’s outcome as a wise choice.
“It’s the right decision to keep it on hold,” Mr Koch said. “There’s so much going on at the moment.
“Yes, employment is strong, so the Reserve Bank would be ticking that going. ‘great, we don’t have to do anything there’. Inflation is still rising at a greater rate than the Reserve Bank would like, but it’s being driven by factors beyond the control of Australian households, who are still facing a massive cost-of-living crisis. It’s even growing, that crisis, I think.
“And then you layer on that, their biggest asset – property prices – are recently starting to come down and there’s a lot of stress out there.
“Average Australians are going into the bunker; their house prices are starting to come down and they’re stressed by all these things that are out of their control.
‘Inflation is going up largely because of the Middle East issue, and because governments are spending and putting demand into the market.”
The RBA has already raised the cash rate three times in 2026, lifting rates by 0.25% in February, March and May, before holding steady in June and again in August. The rate currently sits at 4.35%.
Someone with an average loan size of $735,000 could see their monthly repayments increase by around $120 a month if the RBA lifts rates by 0.25% later this year. That’s in addition to the three 0.25% increases already in 2026.
Impact of a potential rate rise on Australian mortgage repayments
| Loan size | Monthly impact of a 0.25% rate increase | Monthly impact of x2 0.25% rate increases (0.50%) | Monthly impact of x3 0.25% rate increases (0.75%) | Monthly impact of x4 0.25% rate increases (1%) |
| $500,000 | $81 | $164 | $247 | $331 |
| $600,000 | $98 | $196 | $296 | $397 |
| $750,000 | $122 | $246 | $370 | $496 |
| $900,000 | $146 | $295 | $444 | $596 |
| $1,000,000 | $163 | $327 | $494 | $662 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 6.15% that is increased by 0.25% a month. It assumes a 30-year loan term, with no ongoing fees. This does not take into account the reduction of the loan balance over time. | ||||
Despite today’s decision, new Compare the Market analysis found many mortgage holders could still create their own rate cut if they’re paying more interest than they need to.
Someone on an average interest rate of 6.15% for the average loan size of around $735,000 pays approximately $4,478 a month. But if you were on a 7.15% interest rate, you’d be paying around $4,964 a month – a difference of $486.
“That is a massive difference,” Mr Koch said. “Two lessons to come out of it. Number one is to understand what you’re paying on your home loan rate, as so many people don’t. And the difference in the market is like four RBA interest rate movements that are just sitting there. If you’re paying more than you need to, you’re a mug.”
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
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