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Rate hike pain: The average borrower could be paying $443 a month more by Christmas

Rate hike pain: The average borrower could be paying $443 a month more by Christmas

The average variable borrower could be paying an extra $443 a month on their home loan by Christmas, according to new analysis from RateCity.com.au.

Technical assumptions in the RBA board minutes show the cash rate could increase to 1.75 per cent by the end of the year and hit 2.5 per cent by the end of 2023.

Economists are predicting this could potentially include a 0.40 percentage point hike next month.

Analysis from RateCity.com.au shows the average variable owner-occupier with a $500,000, 25-year principal and interest loan could see their monthly repayment rise by an extra $106 if the RBA hikes the cash rate by 0.40 percentage points in June. This is in addition to the increase from the May RBA hike.

Potential impact of a 0.40% RBA rate hike - calculations are for existing customers on a 25-year loan

Loan sizeIncrease in repayments 0.40% hike
$1 million$212

Source: RateCity.com.au. Notes: based on an owner-occupier paying principal and interest with 25 years remaining on the estimated RBA average existing customer variable rate of 3.14%. Above calcs do not include increase from May hike.

By Christmas, if the cash rate hits 1.75 per cent, the same borrower could be paying a total of $443 a month more on their repayments than they were before the cash rate hikes began (April 2022).

If the cash rate gets to 2.50 per cent by the end of 2023, the same borrower will be paying a total of $651 more on their monthly repayments since the hikes began.

Total increase in repayments from start of hikes
Loan sizeBy end 2022
(cash rate 1.75%)
By end 2023
(cash rate 2.50%)
$500K loan$443$651
$750K loan$665$977
$1M loan$886$1,302

Source: RateCity.com.au. Repayments are for an owner-occupier paying principal and interest over 25 years, applying forecasted rate hikes. Starting rate is the average existing customer variable rate of 2.89%.

RateCity.com.au research director, Sally Tindall, said: “While Governor Lowe has said the RBA doesn’t know exactly how high the cash rate will go, or by when, what we do know is there are plenty more hikes to come over the next year and a half.”

“The average borrower is potentially staring down the barrel of $651 hike in total to their monthly repayments by the end of next year. That’s like buying a new dishwasher every single month,” she said.

“Sit down and work out what your repayments will look like, even if your rate rose by 3 per cent. If you don’t think you’ll be able to make these higher repayments, take action now.

“The longer you wait to make changes, the bigger the bind you’ll find yourself in.

“Cutting back on regular expenses, switching to a more competitive home loan and asking your boss for a pay rise can inject some real, ongoing relief into your budget.

“The national debt helpline is a fabulous resource to help people when bills start piling up around them. Just remember, the sooner you reach out for help, the better,” she said.


  1. Cut back on expenses, particularly regular ones. Switch to a cheaper energy provider, rotate entertainment subscriptions, make more packed lunches and cut back on takeaways.
  2. Switch to a lower rate loan. Four lenders are still offering variable rates under 2 per cent post the RBA May hike.
  3. Ask your boss for a pay rise. The average wage is set to rise. Make sure your wage does too.

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This article was reviewed by Head of Public Relations Laine Gordon before it was published as part of RateCity's Fact Check process.



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