Average Aussie homeowners may be spending $344 more on monthly repayments than they were at the start of the year, with the Reserve Bank confirming its third consecutive rate hike for 2026 today.
Compare the Market crunched the numbers and found borrowers with an average loan of $736,000 paid around $114 more a month for each 0.25% rate hike confirmed since February.
Those three rate hikes could add $4128 to repayments over a year.
Compare the Market’s Economic Director David Koch said that amount could represent around four months’ worth of groceries*, almost a year and a half of petrol*, or two return tickets to London.
“Quite simply, these hikes will have a huge impact on household budgets,” Mr Koch said. “If the first two didn’t, I think this third one could really scare people into cutting their spending. For people who were already living up against their limits, and for recent homebuyers unfamiliar with higher rates, I think this is really going to hurt.
“All of the rate cuts homeowners enjoyed last year have officially been reversed.”
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. | ||||
Mr Koch said continued uncertainty about further rate hikes and the direction of the economy could change the way Australians think about property.
“We have seen massive growth in property values over the past few years in most of our capital cities – I think that boom era may be coming to an end,” Mr Koch said. “Rate cuts last year, as well supports like the Home Guarantee Scheme, gave a lot of new buyers confidence to enter the market, sometimes with much smaller deposits than what would have historically been required.
“Now rates are on the way back up, we’re likely going to see lenders tighten the amount people can borrow – and that’s going to have a big impact on aspiring borrowers who can’t stump up a big deposit.
“And anyone considering their next home purchase, whether they are upsizing or rightsizing, might have to think twice about their budget, because the repayments on average loans are potentially a lot higher.
“Through in uncertainty about the future of the job market, with the ramifications of inflation and the threat of AI redundancies and I think we’re looking at much more conservative buying behaviour in the year ahead.”
Meanwhile, people already paying off a loan should be proactive to minimise repayment pain, Mr Koch said.
“If you haven’t refinanced for a few years, and maybe you’ve come off a fixed rate, you really can’t afford not to check and see if a better deal is out there,” Mr Koch said.
“Just a few months ago, one of our brokers at Compare the Market was able to reduce one Moreton Bay man’s repayments by around $5,000 over two years* by helping to move him onto a split loan with two cheaper rates.
“It is still possible for a lot of people to save on their home loan. It just takes a bit of research, or a good broker on your side to go in and bat for you.
“Either you’ll find out you’re on a good rate already, or you’ll potentially save a bundle. That’s a win-win if you ask me.”
*Based on average weekly grocery spend of $198 and average weekly fuel spend of $56 via Compare the Market’s Household Budget Barometer 2025
*On 4/2/26 rate lock $375,000 2-Year Fixed Owner Occupier home loan at 5.39% prior to Lender’s rate increase to 6.14% effective 6/2/26. Est. savings $5,025 over 2 years (incl. rate-lock fee). Indicative only and subject to change based on specific lender requirements. Compare the Market doesn’t compare all products in the market. See our website to view our range of lenders.
For more information, please contact:
Sarah Orr | 0401 044 292 | [email protected]
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