The Reserve Bank of Australia (RBA) is expected to hike the cash rate to 4.6% on Tuesday, marking the highest level since 2011. This move would be the fourth increase in 2026 and push typical home loan interest rates to 6.5%.
Impact on Mortgage Repayments
For someone with an average-sized new mortgage of $731,000, now paying a rate of 6.2%, an increase would add about $119 to their $4,477 monthly repayments. That would take the total rise in repayments since January to nearly $480.
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House Prices and Borrowing Capacity
House prices would fall further after a fourth rate rise. Comparison website Canstar estimated a hike would cut $11,200 from the borrowing capacity of someone earning an average annual full-time wage of $108,650, taking the total lost borrowing power to $47,400.
Household Budgets Under Strain
Household budgets have also been strained by rising petrol prices amid the US war on Iran, now 80c higher since the start of the year, adding $44 to the cost of filling up a vehicle with a 55-litre tank. Consumer spending is already slowing, with Commonwealth Bank data showing households cut back on purchases of education, motor vehicles and household goods in August.
Comparison of Key Metrics
| Metric | Before Hike | After Hike | Change |
|---|---|---|---|
| Cash Rate | 4.35% | 4.6% | +0.25% |
| Typical Home Loan Rate | 6.2% | 6.5% | +0.3% |
| Monthly Repayment (Avg Mortgage) | $4,477 | $4,596 | +$119 |
| Borrowing Capacity (Avg Wage) | Base | Reduced by $11,200 | - |
Key Takeaways
- The RBA is expected to hike the cash rate to 4.6%, the highest since 2011.
- Mortgage repayments could increase by $119 per month for an average new mortgage.
- House prices may fall further, and borrowing capacity could shrink by $11,200.
- Rising petrol prices and slowing consumer spending add to household financial pressure.
FAQ
What is the current cash rate in Australia?
The current cash rate is 4.35%, but it is expected to increase to 4.6% on Tuesday.
How much will mortgage repayments increase?
For an average new mortgage of $731,000, repayments could increase by about $119 per month.
What impact will the rate hike have on house prices?
House prices are expected to fall further, and borrowing capacity could be reduced by $11,200 for an average full-time worker.
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