'Disastrous': Grim reality of how much RBA rate hike will cost you

Tuesday, 5 May 2026 14:41

The average Aussie borrower has had a shocking start to 2026, and it just got worse.

The latest rate hike has put millions of Australian borrowers back to square one.

The Reserve Bank of Australia (RBA) has handed down a third consecutive interest rate hike, increasing the cash rate target to 4.35 per cent.

Nine Money editor Effie Zahos acknowledged the latest decision was a blow for households.

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The rate hike has essentally put millions of borrowers back to square one.

"The RBA is hoping three rate hikes will make inflation right, but for households right now this is disastrous," she said.

"You're looking basically, depending on the mortgage size, around $100 more for the month."

An owner-occupier with a $600,000 mortgage and 25 years remaining at the start of this year's hikes will need to add $91 to their minimum monthly repayments with the 0.25 per cent rise, according to estimates from financial comparison website Canstar.

The total increase across three consecutive hikes would be $272 a month.

Australians with a $500,000 mortgage over 25 years can expect to pay about $76 extra a month, while those owing $700,000 will need to pay an additional $107 a month.

Owner-occupiers with $800,000 left on their mortgage can expect to pay an extra $122 each month.

Those with $900,000 will likely need to pay an additional $137 a month.

Those owing $1 million could pay an extra $152 following today's rate hike.

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Some mortgage holders will be paying an additional $100 a month.

Canstar data insights director Sally Tindall said Australians who kept their mortgage repayments the same following the cash rate cuts in 2025, the repayment buffer they had built up would be essentially erased.

"While more than a year of higher repayments won't have been in vain, the strategy will have delivered only a limited cushion against rising rates," Tindall said.

Borrowers are also being told to prepare and calculate how much repayments will be if there are two further hikes in June and August.

Tindall recommends borrowers contact their lender and request a rate review.

"Haggling should be borrowers' first port of call, because picking up the phone can potentially produce near-immediate relief," she said.

"However, banks aren't handing out discounts as freely as they were a couple of years ago.

"If your bank won't budge when you haggle, don't take it personally, instead, take your business elsewhere."

Haggling can only take your rate so far. Those who want the sharpest rates are likely to have to refinance.

Borrowers should ask about hardship assistance if repayments are becoming difficult and they have already negotiated with their lender.

Independent financial advice is available from the National Debt Helpline on 1800 007 007.

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.