The Reserve Bank of Australia (RBA) has raised the official interest rate for the first time in over two years, delivering a blow to mortgage holders already struggling with rising costs. The widely anticipated decision marks the end of the shortest rate-cutting cycle in the RBA's modern history, following three reductions in the cash rate target in 2024.
A regional New South Wales couple, aged 25 and 26, said the dream of building a home has turned into a financial 'hustle' they no longer want to maintain. After settling on land in September 2022, rising rates and building material costs decimated their initial budget. 'If we had known how much our repayments would end up, we never would have bought,' the woman said. The couple have decided to sell their newly finished home and pivot to the tiny house movement due to the cost of living and lack of freedom.
Gold Coast first home buyer Jack Petzke, who settled on his first house in October 2025 with his partner Alyshia Cater, said the rate increase will force him to revise his budget. 'It does put a little bit more financial pressure on us to make sure that we have got our ducks in a row,' he said. The couple, in their late 20s, have an upcoming wedding in May, compounding the financial pressure.
Mortgage broker Lauren Hall at Loan Market said a quarter-point increase could be around $100 extra per month for the average mortgage. The CEO of the Mortgage & Finance Association of Australia, Anja Pannek, said the increased official cash rate would be felt by millions of borrowers. 'For an average household with a mortgage of $694,000, a 0.25% increase in interest rates equates to an extra $109 in monthly repayments,' she said.
A 31-year-old Melbourne man, who bought his first home in October 2025, said the rate hike feels like a 'punishment'. To secure his mortgage on a single income, he took a casual job alongside his full-time role. 'In this economy, you can never have too much money, especially on a single person's income,' he said. RBA governor Michele Bullock said the rise is 'the right thing for the economy' and that while it is hard for mortgage holders, the alternative is potentially even harder.
