Homeowners have been hit with a double whammy today, with the RBA increasing rates just as Aussies are copping higher prices at the petrol pump – and Compare the Market’s Economic Director David Koch warns the painful combination could be “over-kill”, threatening to push Aussies to the brink of a recession.
For someone with an average loan of $736,000 today’s 0.25% rate increase could add $116 to monthly repayments –that’s $1,392 more a year. Meanwhile, the average price for Unleaded 91 across the five major capitals hit around $2.30 today – meaning it could cost $115 to fill up a 50-litre tank.
Mr Koch said the news would not be welcome, but rate hikes were a “necessary evil” to tame inflation.
“Nobody wants another rate hike – we’ve already had one this year – and that means millions of homeowners are spending thousands more on their repayments,” Mr Koch said. “It feels like a kick in the guts, because so much of this is out of our control. Once again, it’s homeowners that will be saddled with the biggest burden.
“But inflation is a prickly issue and that means it’s not one we can sit on. Every month we wait to act could be precious time lost in the fight against more expensive groceries, power bills and insurances. The Reserve Bank is getting serious, but I fear this is taking the pain a touch too far, too fast.
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 | $79 | $158 | $239 | $320 |
| $600,000 | $94 | $190 | $287 | $384 |
| $750,000 | $118 | $237 | $358 | $480 |
| $900,000 | $142 | $285 | $430 | $577 |
| $1,000,000 | $157 | $317 | $478 | $641 |
| *Calculations assume an owner-occupied loan with a variable interest rate of 5.42% 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. | ||||
A March 2026 Compare the Market survey found that any increase in interest rates would impact budgets.* Aussie homeowners said that to make extra repayments in the event of more interest rate rises, they’d have to:
- Dip into savings: 15%
- Spend less on clothing and accessories: 22%
- Reduce spend on eating out and takeaway meals: 21%
- Sacrifice social activities: 19%
- Delay big-ticket purchases: 16%
But Mr Koch said further interest rate hikes weren’t off the table.
“This is a situation that’s unfolding every day and today’s decision shows the RBA has a laser focus on taming inflation,” Mr Koch said.
“There’s no meeting in April, but the RBA sits again in May and another six times this year. I don’t think we’re out of the woods yet, and it’s a real balancing act for the RBA — they need to rein in inflation without pushing the economy towards recession.
“I encourage homeowners to prepare for the possibility of more hikes this year. That means knowing your rate, and doing some leg work to make sure you’re not paying more than you need to.
“More than a third of mortgage holders we surveyed don’t even know their rate, which is far too many. If you’re one of them, you could be missing out on better deals without even knowing it.
“Start a conversation with your lender, because there are small steps you can take right now that could make a big difference if rates rise again.”
*Compare the Market survey of 1,015 Australian adults, conducted March 2026.
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
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