RBA cash rate tipped to hit 4.60 per cent in fresh pain for borrowers

Source : Perth Now news

Mortgage holders may have to stretch their wallets even further as markets expect them to be hit with a $6509-a-year increase in repayments.

It’s widely predicted the RBA will increase the cash rate by 25 basis points to 4.60 per cent on Tuesday.

The rate rise would leave borrowers with an average mortgage of $736,259, paying an extra $427 a month than they were at the start of 2026 or an extra $5124 a year, according to Finder.

But the pain could deepen, with one further rate rise this year predicted, likely in November.

Two 25 basis point increases would leave the average borrower on the above mortgage paying $542 per month, equivalent to an extra $6509.

ANZ economist Sophia Angala said persistent underlying inflation and the re-escalation of the conflict in the Middle East and higher oil prices had increased the risk of follow-up rate hikes.

“As a result, we expect the RBA to raise the cash rate by 25bp in both September and November 2026,” Ms Angala said.

Money-saving expert Joel Gibson said economists’ predictions would be a painful blow for households who had already exhausted ways to cut back their spending.

“We’re in uncharted territory now if we get any more rate hikes because it hasn’t been this high since I think 2011,” Mr Gibson said.

“There’s a whole iteration of borrowers who’ve never seen rates this high.

“A lot of people are already at their limit in terms of what they can possibly find to cut their spending, to save money wherever possible.

“But if rates keep going up, some people unfortunately just won’t be able to afford their mortgage.”

The warning comes as many households face higher costs across other areas of their budget, including groceries, fuel and insurance.

While wages have grown across some sectors, Mr Gibson said they had not kept pace with the rising cost of living and rates this year.

“People are being left behind,” Mr Gibson said.

He said discretionary spending was the first casualty, with fewer people eating out, having holidays and spending time with family and friends.

Households were also looking for savings on essentials, switching to grocery home brands and avoiding driving where possible because of soaring fuel costs.

But Mr Gibson said some households were being pushed into more risky and serious cost-cutting decisions, including going without insurance.

“Underinsurance is an obvious side effect of the fact that it’s become unaffordable for people,” he said.

“People are taking risks they shouldn’t be taking if they had an option.”

Mr Gibson said some households had also been putting more expenses on credit cards to make ends meet, potentially pushing into debt and further financial pressure.

He urged borrowers already struggling with repayments to speak with their lender, rather than wait until they fell further behind.

“Don’t sort of bury your head in the sand and hope that they won’t notice,” Mr Gibson said.

“If you contact your bank proactively, there are various things that they can do to get you through this next period.”

Options could include temporarily switching to interest-only repayments, extending the loan term or seeking other forms of hardship assistance, he said.

For financially secure households, Mr Gibson said another rate rise could be a prompt for reviewing mortgages and household bills.

“Can you refinance your mortgage at a lower rate? Because even 50 basis points could save you thousands of dollars,” Mr Gibson said.

“Can you save hundreds of dollars by doing things a bit differently with the grocery shopping? Can you renegotiate your insurance premium?

“If you haven’t already done all those things, gone through the household budget and just really tried to smash each bill down, then this will be the time that a lot of people will be forced to do that.”