Illawarra home owners who recently purchased could be an extra $139 worse off each month following the Reserve Bank's decision to increase the cash rate again.
On Tuesday, the RBA board decided to increase the cash rate target by 25 basis points to 4.1 per cent.
Figures compiled for ACM by comparison site Canstar show that in the Illawarra, where the median house price is $1.145 million, home owners could be stung $139 more each month as a result of the rate rise, with their monthly repayments increasing to $5907.
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The calculation is based on an 80 per cent loan over 25 years, assuming the person was previously on an average variable rate of 5.76 per cent that has now increased to 6.01 per cent.
The big four banks had forecast the RBA raising the official cash rate 25 basis points to 4.1 per cent.
They forecast a hike as inflation sits above the RBA's target, and the war in the Middle East puts pressure on fuel prices and in turn the greater economy.
It is the second rate rise within two months and with banks expected to raise mortgage rates accordingly, those with a mortgage are looking at extra costs.
"This is a tough blow at a time when Aussie families are already feeling the pinch from a volatile global market," Graham Cooke, head of consumer research at Finder said.
"Between the rising cost of fuel and now higher mortgage repayments, financial safety nets could be pushed to breaking point."
'We may see a period of volatility'
Monique Field from the Shellharbour-based Monique Field Property said the first interest rate increase of 2026 saw many buyers take a more cautious approach, "however we have still continued to see transactions occurring across all price ranges".
Even before Tuesday's announcement, she said over the past two weeks, another factor has begun to influence buyer behaviour.
"Many buyers who would typically prefer to secure their next home before selling are finding themselves at a disadvantage, as several banks have recently reassessed their lending portfolios and are now limiting or withdrawing relocation and bridging finance options," she said.
"This has created some hesitation in the marketplace.
"With today's interest rate announcement, we may see a period of volatility as buyers digest the news. Some will remain cautious and choose to wait, while others recognise that acting now allows them to purchase while their borrowing capacity still supports their plans.
"What we are continuing to see is that well-presented homes priced in line with current market conditions are still attracting strong interest, particularly from buyers who understand that opportunities exist in changing markets."
'A cautionary approach'
Katrina Rowlands is the managing director of Wollongong-based mortgage brokers Mortgage Success.
Just prior to Tuesday's announcement, Mrs Rowlands said the rate increase has already affected the Illawarra market with a tangible slowing down of the price growth of the real estate offered, and a slowdown on new to market properties.
"New buyers have a more measured approach to their maximum lending as they are already pricing in another potential 0.25 per cent rate rise and have a legitimate cautionary approach," she said.
"The favourable points of our market are the continued shortage of supply and high rent demand, as we are still attracting buyers who have all but given up on Sydney as they are priced out of that market already.
"A calm but cautionary intent to still buy seems to be the feeling."
Impact on buyers and sellers
The decision by the RBA to combat inflation by increasing interest rates for the second time this year will likely reduce borrowing capacity and soften buyer confidence, according to a leading real estate analyst.
LJ Hooker's group head of research and business Intelligence, Mathew Tiller said a strong Australian economy, buoyed by a stable jobs market, has enabled the RBA to take swift action.
It will also be monitoring conflict in the Middle East and fears of a looming oil crisis.
"What happens in the Middle East will matter for Australians, and how much of an impact really depends on how long the conflict drags on," Mr Tiller said.
"The first impact will be higher fuel and energy prices, and if it continues, that could broaden into higher shipping and import costs. This is the sort of thing that the RBA will be watching closely, and it adds to the case of interest rates staying higher for longer."
On the property front uncertain times are also having an impact.
Auction clearance rates are slightly down from 12 months ago; however, listing volume has increased.
Data from recent weeks suggests vendors are opting to take attractive early offers rather than put their property under the hammer, according to Mr Tiller.
However, he said the current situation may create some opportunities for first home buyers with an increase in listings creating new opportunities to take their first steps on the property ladder.
