Homeowners who recently took out a mortgage in the Riverina may be forced to tighten their belts following the Reserve Bank's decision to increase the cash rate to 0.85 per cent on Tuesday.
In the Riverina, where the median dwelling value is currently $430,126, home owners could pay $96 more each month as result of the rate rise, with their 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.
The data also forecast how potential future increases to the cash rate would impact homeowners.
The same Riverina buyer would pay $1,723 per month on a 4.4 per cent variable interest rate or $1,932 per month on a 5.4 per cent variable interest rate.
Many Riverina buyers had been anticipating rate rises, with some already factoring them into their future property purchases.
The reserve bank has decided to raise the official cash rate by 50 basis points, taking the overall cash rate to 0.85 per cent.
It's the second time the RBA has raised rates in as many months, following the board's May decision to begin hiking rates from their record low of 0.1 per cent, where they had sat since November 2020.
That decision followed larger than anticipated rises in the inflation rate, with the cost of goods and services spiralling in recent months.
The rate rises are likely to pile further pressure on households already facing rising prices on multiple fronts, from the petrol pump to the supermarket till.
For example, grocery prices jumped over the first three months of the year, according to the latest CPI figures, with the price of fruit and vegetables up 6.7 per cent.
Petrol prices continue to hover around $2 a litre in most capital cities, despite the temporary cut to the fuel excise.
Power and gas prices are also on the rise, with price rises of up to 18 per cent expected from the start of June for some households.
Banks were quick to pass on May's increase to the official cash rate, with Canstar reporting 91, or 95 per cent, of the lenders on its website increased their variable rate products by an average of 0.25 per cent following the last RBA announcement.
"Unfortunately the first increase in repayments in 11 years is just a taste of what is to come, and puts borrowers on notice that now is the time to financially prepare as best they can," Canstar's financial commentator Steve Mickenbecker said.
Canstar analysis shows that a household borrowing for 80 per cent of the current median house price in regional Australia would be worse off by $68 a month if today's 0.25 per cent RBA rise is passed on by the banks.
This could jump up to $623 a month in the future if the official cash rate rose to 2.5 per cent, as canvassed by the RBA.
Mr Mickenbecker urged mortgage holders to consider refinancing to a lower variable rate and to start enacting a savings plan.
"It is too late to start planning for this when confronted by a monthly bill from the bank for $2,783 after your repayments have already risen," he said.
"The other part of the plan once you have secured a lower rate has to be to put the savings on the repayment aside to get the loan ahead of schedule, which will help when the going gets tougher."
