Reserve Bank delivers ANOTHER hike for Australians with a mortgage: Here’s how much more you will be paying

Millions of Australians have been hit with another brutal mortgage blow after the Reserve Bank of Australia hiked interest rates, pushing the cash rate to 4.35 per cent.

Governor Michele Bullock warned more increases could still be on the way as inflation threatens to climb further due to the war in Iran and high government spending.

The RBA said eight of its nine board members backed the 0.25‑percentage‑point rise, with one voting to hold.

‘Developments in the Middle East remain highly uncertain but under a wide range of possible scenarios, the conflict adds to global and domestic inflation,’ Bullock told reporters on Tuesday.

‘If left unchecked, higher costs get embedded into price and wage‑setting decisions.

‘These second‑round effects could lead to even higher and more persistent inflation and if so, would require even more tightening in monetary policy to get inflation under control.’

For an owner‑occupier with a $600,000 mortgage and 25 years remaining at the start of this year’s hikes, another 0.25 adds $91 to their minimum monthly repayments. The total increase across the three hikes since February would be $272 a month.

The increase will lift the average owner‑occupier variable rate to 6.26 per cent, pushing it above the 6.25 per cent mark for the first time since January 2025.

She said the government needed to keep spending under control to avoid adding further pressure to inflation, just hours after it emerged Treasurer Jim Chalmers is considering cost‑of‑living relief between $200 and $300 for Australians who earn a wage or salary and pay tax.

‘When governments are spending a lot of money and we’re running up against capacity constraints, then they do need to think about whether or not there’s ways they can help the inflation problem by looking for ways to constrain demand,’ Bullock said.

‘I personally think that the treasurer, privately and publicly, he is focusing on that- but it’s not just the federal government, it’s the state governments as well.’

The decision to raise rates has been criticised by economists and the government for putting further pressure on Australians battling the high cost of living.

‘Australians are already paying a hefty price for the war in the Middle East and this decision will make it tougher,’ Chalmers said in a statement.

‘It will add to the pressure that families and businesses are under at a time of ongoing global instability.’

Chalmers went on to blame the interest rate rise on the United States’ conflict with Iran.

‘What we saw in the month of March was overwhelmingly a story of higher petrol prices before our fuel tax cut kicked in. Higher petrol prices are all about the war in the Middle East,’ he said.

 ‘Any objective observer would conclude that now. When it comes to decisions taken in Washington DC, or indeed in Tehran, Australians are hostage to those decisions taken about the conduct of this war and the end of this war.’

The vote has also been slammed as a ‘wrong decision’ by Matt Grudnoff, senior economist at The Australia Institute.

‘Higher interest rates will do nothing to open the Strait of Hormuz. Higher interest rates cannot change the world price of oil and bring down fuel prices,’ he said.

‘It has chosen to do something, even if that will make things worse, rather than risk being accused of doing nothing.

‘The only tool the RBA has to fight inflation is to change interest rates. But interest rates are ineffective at stopping inflation caused by supply shocks.’ 

It is another hit for Australians after the Australian Bureau of Statistics revealed last week that headline inflation had picked up to 1.1 per cent in March.

Annual inflation is at 4.6 per cent, up from 3.7 per cent, marking the fastest annual pace of price growth since September 2023.

AMP’s chief economist Shane Oliver told the Daily Mail exactly how the rate increase will affect Australians’ household budgets.

‘For someone with an average mortgage, which these days is about $660,000, it’s going to cost them an extra $110 a month in interest payments, which is about $1,300 a year,’ Mr Oliver said.

‘So obviously there’s going to be a hit to household budgets, particularly those with a large mortgage.’

For those without a mortgage, Mr Oliver said the situation is ‘not so bad,’ with higher interest costs having far less of an impact.

‘Renters could face some upwards pressure on their rents, but that’s not necessarily the case, as landlords seek to try and cover their interest,’ he added.

‘In fact, many Australians might benefit via higher bank deposit rates, because bank deposit rates will likely rise as well.’

Mr Oliver added that mortgage payments will go up once borrowers are granted a loan, but higher rates often lead to lower property prices, which could be a silver lining for potential homebuyers.

The economist said the overall effect is still more negative, as Australian households on average have more debt than they have in bank deposits.

‘The value of total household debt in Australia is almost double the value of household bank deposits for the household sector as a whole,’ Mr Oliver said.

‘It is a negative, and that will act as a drag on spending in the economy.

‘So if you’re a business owner, a small business owner, people will be less cashed up and have less money to spend.

‘That can mean lower demand for your products, fewer people coming into your cafe, particularly when you combine it with petrol prices, which I know are off their high but could well go back up again, given the situation in the Middle East.’

In a statement explaining its decision, the RBA noted inflation had picked up ‘materially’ in the second half of 2025, and had then been hit by the conflict in the Middle East.

‘The board assessed that inflation is likely to remain above target for some time and that the risks remain tilted to the upside, including to inflation expectations,’ it read. 

‘It was therefore judged appropriate to increase the cash rate target.’

The decision has come just one week before the Treasurer is due to announce the Labor government’s fifth Federal Budget.

‘The uncertainty and volatility in the global economy mean there is an even greater premium on responsible fiscal management,’ he said on Tuesday. 

‘The budget is already more than $233billion better than we inherited because the Government has found savings, kept a lid on spending growth and banked revenue upgrades.

‘In the upcoming Budget, we’ll continue that record of responsible economic management by saving more than we spend and banking all upward revisions to revenue.

‘This Budget will be focused on fuel security, addressing inflation, boosting productivity and resilience and managing global economic uncertainty, and today’s decision highlights why this is so important.’