Average mortgage payers with a loan around $731,000 will spend roughly $5,568 more over the course of a year, now that rates are a full 1% higher than they were at the start of 2026.

Average monthly repayments are now sitting around $4,502. Compare that with five years ago, when the average loan was $548,000 and the average variable interest rate was 2.8%. Monthly repayments were just $2,252 – half what they are today – according to new analysis from Compare the Market‘s upcoming Household Budget Barometer report.

So how are households finding the extra cash to cover much higher repayments?

Median monthly earnings for a full-time worker were $6,443 in August 2025, around $1,100 more than in August 2021. This suggests wage growth has at least partially closed the gap, particularly for dual-income households.

However, Australians whose incomes have not kept pace — including those who have taken a career break for caring responsibilities — may be facing a widening hole in their household budgets.

Compare the Market’s Economic Director David Koch said it was a heavy blow to a group of Australian households already under strain.

“Yet another gut punch for Aussie families with a mortgage,” Mr Koch said. “Where are people meant to find an extra $5,500 a year? And that’s after tax… On top of that, households are getting hit at the petrol pump and again at the supermarket.

“Rates are higher, loans are bigger, and we have a whole generation of mortgage payers who have never seen rates this high. We can’t keep asking the same group of people to keep tightening their belts when there are forces pulling in the opposite direction.”

Mr Koch repeated his calls for transparency about the role of government spending at all levels in thwarting the RBA’s attempts to cool inflation.

“Consumers, we are all fighting with the Reserve Bank, but government spending and government price rises are undoing all our good work. So why should we pay the penalty?” Mr Koch said. “We all need to be fighting inflation together… households, the RBA and all levels of Government.

“My view is that the Reserve Bank should be calling out governments of all persuasions and all levels to actually fight the inflation battle with them. I think we should be introducing a statement on the conduct of fiscal policy that all treasuries – state, federal, local – should sign up to, committing to a public spending path consistent with that inflation target. And if they spend more and fuel inflation, then they should be singled out and shamed. It’s the only way to get the attention of politicians that are spending too much. As I say, on all different levels of government.”

In the meantime, Mr Koch implored Aussies to do what they could to reduce their mortgage pain by shopping around and negotiating better rates.

“Aussies can’t control the cash rate, but they can keep shopping around for cheaper deals to keep the interest on their repayments to a minimum,” Mr Koch said.

“Don’t be shy. Phone your lender or get a good broker working for you to make sure you’re on a competitive offer. Even small reductions can make a big difference now and over the life of your loan.”