Two-thirds of Australians say they will be worse off if the RBA increases the cash rate again this year, according to new research from Compare the Market, highlighting a growing divide between people paying off a mortgage and those who own their home outright.*
Australian households may have weathered three cash rate hikes already this year, but 65% of Australians surveyed said their household would be negatively impacted if interest rates increase again – compared to just 35% who said it wouldn’t have a major impact on their household.
With around 31% of Australians owning their home outright, the figures may point to a two-speed economy. Households with mortgages or rent increases are being forced to cut back, while some debt-free homeowners may have more capacity to keep spending. It’s a dynamic that threatens to blunt the impact of monetary policy and keep inflation higher for longer.
The findings reveal households experiencing rate pain through either their mortgage or rental prices are already contemplating significant sacrifices if borrowing costs continue to climb. Nearly three in ten (29%) said they would have to cut back on discretionary spending, while 21% would be forced to reduce spending on essentials such as groceries, fuel and utilities.
Others said they would be forced to dip into savings to cover higher repayments (16%), delay major purchases or financial goals (13%), take on extra work or find another source of income (12%) or worry about rental increases (11%).
Alarmingly, 17% said another rate rise would increase their financial stress or anxiety, highlighting the growing mental strain that higher costs are placing on Australian families.
The Reserve Bank has already lifted the cash rate by 0.25 percentage points in February, March and May, before holding steady in June. The cash rate currently sits at 4.35%.
Compare the Market’s Economic Director David Koch said a perfect storm of factors were already impacting the household budget and another increase in interest rates would impact families who are already struggling to keep their head above water.
“While another rate rise might look modest on paper, many Australians feel like they’ve already absorbed as much as they can,” Mr Koch said. “The reality is a 0.25% increase would add around $120 a month to an average $735,000 loan. That’s not exactly loose change and families need to find that money somewhere.
“People aren’t just worried about higher mortgage repayments; they’re also concerned about what it could mean for their grocery bill, savings, financial goals and overall wellbeing.
“It’s particularly concerning to see almost one in five people say another rate rise would increase their financial stress or anxiety. Financial pressure affects far more than your bank balance. It can impact your confidence, relationships and quality of life.”
Mr Koch said if interest rates increase again, there may still be ways for households to claw back cash.
“Start by reviewing your household budget and looking for savings across major expenses such as energy, insurance, telecommunications and subscriptions. Small savings across multiple bills can add up over the course of a year.
“Also ensure that your current home loan is still competitive. Lenders are constantly adjusting rates and introducing new offers to attract customers, so loyalty doesn’t always pay. Even a modest reduction in your interest rate could make a meaningful difference to your monthly repayments.”
Despite ongoing pressure on household budgets, Compare the Market’s research also found that many mortgage holders aren’t actively seeking a better deal, despite feeling the pressure from interest rate rises.
More than a quarter of mortgage holders surveyed (28.4%) admit they should probably be looking for a better deal, but haven’t taken action. More than one in 10 (11.4%) said they don’t know where to start.
“There are still some highly competitive home loan rates available, particularly for borrowers with strong equity and a solid repayment history,” Mr koch said. “If you’ve been with the same lender for years and haven’t compared your options recently, you could be paying more than you need to.
“Even if you’re not ready to refinance, it’s worth contacting your lender and asking whether they can offer a sharper rate. A quick phone call could potentially save thousands over the life of a loan.”
*Compare the Market commissioned PureProfile to survey 1,018 18+ aged Australian adults, conducted July 2026.
