RBA interest rates: How much more you will pay as interest rate rises to 2.35%

Australian homeowners have been slugged with another super-sized rate rise meaning they will need to find hundreds more to meet repayments.

Homeowners have been hit with another super-sized interest rate rise from the Reserve Bank of Australia meaning they will fork out hundreds more on repayments.

The decision to increase rates by 0.5 per cent pushes the cash rate to 2.35 per cent.

It’s the fifth time in as many months that interest rates have surged, after the first increase occurred in May which saw rates rise to 0.35 per cent and then to 0.85 per cent in June, while in July rates were pushed to 1.35 per cent before jumping to 1.85 per cent in August.

The September hike won’t be the last, with some experts predicting interest rates to hit 3 per cent by the end of the year.

The interest owed on loans varies depending on the type of mortgage and the bank you’re with, but you can use our rate calculator below to find out how much your monthly repayments will increase by.

The latest increase means borrowers with a $500,000 mortgage over 30 years will be forking out approximately $652 more per month to cover their repayments than they were in April, assuming lenders pass on the rate rise in full, according to Canstar.

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Graham Cooke, head of consumer research at Finder, said the combined cash rate hikes will cost the average Aussie homeowner an additional $801 per month compared to what they were paying in April.

To combat higher loan repayments, many Australians have already moved their loan to a new lender since the first cash rate hike in May.

Data from the Australian Bureau of Statistics shows that almost 76,000 owner occupied home loans were refinanced to a new lender from May to July, totalling roughly $39 billion.

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Effie Zahos recommends refinancing if you can. Picture: Tim Hunter

Switching to a new loan can be a great way to combat rate hikes but refinancing regularly has its pros and cons, explains Canstar’s Editor-at-Large and money expert, Effie Zahos.

“In recent weeks we’ve seen a number of lenders – including major banks – decrease some of their variable rates for new customers. Most of us know that when it comes to home loans, loyalty doesn’t usually pay,” she said.

“Data shows that new customers get a better deal than existing ones. According to the Reserve Bank, the interest rate margin between existing and new variable loans grew to 48 basis points in July.

“According to Canstar’s calculations, the interest rate difference equates to an extra $136 a month in home loan repayments on a $500,000 loan.”

Originally published as RBA interest rates: How much more you will pay as interest rate rises to 2.35%