RBA rate rise: Mortgage costs increase by thousands of dollars

The Reserve Bank of Australia has lifted interest rates for five consecutive months since May. It will be come six in a row if they go up at the RBA's meeting on Tuesday.

Home loan customers who secured the average variable rate in May 2022 (3.02 per cent) would now be facing a 5.77 per cent interest rate, if their lender passed on all the rate increases (275 basis points).

They would to find an extra $3227 a year to afford the repayments on a $400,000 loan, for an owner occupier paying principal and interest.

"Borrowers need to brace yet again for another rate rise in October," Mozo personal finance expert Claire Frawley said.

"It is expected that they will increase by at least another 50 basis points before the end of the year. Whether that's split up over two months or just one rise."

Another 50 basis point hike will take the cash rate target to 2.85 per cent, an increase of 275 basis points since May.

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Data research company Mozao said so far this year, 15 lenders have passed on all five rate hikes in full, to owner occupier customers.

The average variable interest rate in Mozo's database is 4.93 per cent, with the best rate of 3.34 per cent through G&C Mutual Bank.

Borrowers could save up to $4248 a year off their mortgage, by switching to the lowest variable rate from the average variable interest rate.

"Although home loan interest rates are returning to more normal levels following the pandemic, consecutive increases are clearly hitting home with many borrowers confronted with higher monthly repayments," Ms Frawley said.

"While refinancing might seem like a massive undertaking, especially as rates are expected to continue to rise, it is a great way to soften the burden of higher interest rates and inject some extra cash into household budgets."

To check to see how much your repayments might increase, visit Mozo's rate change calculator.