The Reserve Bank of Australia (RBA) has increased the official cash rate by 0.25 percentage points to 3.85 per cent, prompting concern for millions of mortgage holders about rising home loan repayments. Homeowners with variable-rate mortgages could see their monthly repayments rise by over $100. For instance, a borrower with a $700,000 loan may face an additional $105 per month, bringing repayments to $4,412, while those with a $1 million mortgage could pay $150 more, increasing their monthly repayment to $6,303.
Graham Cooke, Finder’s head of consumer research, described the news as “a cold shower for homeowners after a brief reprieve.” He noted that many who refinanced or entered the market during the 2025 easing cycle may feel blindsided by the rapid pivot from falling to rising rates in just six months. Cooke also said last year’s temporary mortgage stress relief may have been “wiped away” by the latest hike.
Treasurer Jim Chalmers acknowledged that the decision is “difficult news” for millions of Australians with mortgages, stating, “We understand the pressure that this puts on Australian families and businesses. While today’s decision was widely expected, obviously that doesn’t make it any easier.”
Not all borrowers will be affected, however. About 80 per cent of NAB variable-rate customers and most CBA customers did not reduce their repayments when rates fell last year, giving them some flexibility. Fixed-rate borrowers will see no change until their fixed term ends.
On the upside, higher rates will benefit savers, as savings accounts and term deposits generally offer greater interest returns when the cash rate rises. Conversely, lower rates typically reduce interest earnings on savings.
