Experts predict homeowners may re-finance their loans and first-time buyers could downsize their property wish list following the Reserve Bank's decision on Tuesday to increase the cash rate to by 50 basis points to 0.85 per cent.
Wagga-based Mainland Finance's mortgage specialist Bill Beehag said experts and buyers knew "it was only a matter of time" before interest rates began to rise.
Tuesday's jump marks the second time the RBA has increased rates in as many months after they had sat at a record low of 0.1 per cent since November, 2020.
"People forget what goes down, probably has to go up," Mr Beehag said.
Following the May rate rises to 0.35 per cent, Mr Beehag had a lot of inquires from people wondering if they should fix their interest rates.
As a result of Tuesday's jump, Mr Beehag expects to see an increase in inquires from people considered re-financing their loans particularly as the RBA flagged further rate rises were coming.
He said recent buoyant house prices meant many buyers paid high prices for their properties and exhausted their cash reserves, so some homeowners may have concerns about servicing the higher interest rates.
However, he said many buyers relied on mortgage brokers and financial planners to ensure they didn't over commit to a loan they couldn't service, even when rate rises occur.
"A lot of people come to us to find out what [property] they can afford ... and we give them the goal posts," he said.
"A few people are definitely disappointed when you tell when how much they can afford particularly when the on-line calculator they may use, may not have factored-in a lot of things."
He said buyers also needed to be aware that if they purchased property at the top of the market they won't see property values and equity rise at the same rate it has over the previous 12 months.
PRD Real Estate Wagga's agent Harry Mangelsdorf said while a rate rise was expected, the amount it jumped came as a surprise.
"It's now getting back to a more realistic rate. We had to expect it; the rate couldn't have got any lower," he said.
Mr Mangelsdorf said the impact of the rate hike won't be felt immediately by Wagga's "resilient" market.
"I think first-home buyers might be a little bit apprehensive but realistically it's not going to make too much of difference to what their repayments will be. It's not massive."
Mr Mangelsdorf said first-home buyers may however start to be more cautious about what properties they buy.
"I think there needed to be a re-collaboration of the criteria people have because you see single people or young couples that are saying they want a four bedroom house, a pool or a shed ...," he said.
"I think it's bringing it back to what's realistic and affordable."
In the Riverina, where the median dwelling value is currently $430,126, home owners could pay $96 more each month as result of the rise, with monthly repayments jumping to $1,594, according to analysis provided to ACM by comparison site Canstar.
The calculation is based on an 80 per cent loan on the median dwelling value, assuming the person was previously on an average variable rate of 3.25 per cent that has now increased to 3.75 per cent.
