RBA urged to consider the “human" cost of rate rises as it hikes again

A peak mental health body has urged the Reserve Bank of Australia (RBA) to consider the “human” cost of ongoing rate rises, after the bank’s board hiked the cash rate again today, putting Aussie mortgage payers under even greater pressure.
At its monthly meeting for March, the RBA board hiked the cash rate by 25 basis points to 3.60%, a now-familiar development for borrowers. Aussies have now seen 10 successive rate rises, making variable-rate mortgages much more expensive than this time last year.
As rates continue to rise and the cost of living crisis bites, Aussies are beginning to feel the effects, and a peak mental health body has urged the bank and its chair Philip Lowe to consider the human and not just the economic dimension of its policy decisions.
How much could this latest cash rate hike cost mortgage-payers?
Variable rate mortgage borrowers have faced almost a year of monthly interest rate hikes since the RBA began raising the cash rate in a bid to curb rising inflation, and monthly repayments are considerably more expensive than this time last year.
Following this latest RBA cash rate hike, it’s likely that major banks and lenders will also raise their own home loan variable rates, so Canstar Research crunched the numbers to find out how much more the average borrower might expect to repay.
The below calculations show how much more a borrower with a $500,000, $750,000 and $1,000,000 home loan might expect to pay each month, assuming that their mortgage is on an average variable rate and that their lender has passed on each of the earlier cash rate hikes in full (and made no other rate changes).
We also looked at how much more expensive the average variable rate mortgage might be now compared to what it was in April of last year, the last month before the current round of cash rate hikes.
How could this cash rate hike affect a $500,000 home loan?
- 25 percentage point rate rise: $82 more in monthly repayments, and $1,084 total since April 2022.
How could this cash rate hike affect a $750,000 home loan?
- 25 percentage point rate rise: $123 more in monthly repayments, and $1,626 total since April 2022.
How could this cash rate hike affect a $1,000,000 home loan?
- 25 percentage point rate rise: $164 more in monthly repayments, and $2,168 total since April 2022.
Source: www.canstar.com.au – 07/03/2023 Monthly repayment calculations based on a loan repaid using principal & interest repayments over a total loan term of 30 years at a loan-to-value ratio (LVR) of 80%. Repayment calculations interest rate based on a starting rate of 5.73% (average owner occupier variable rate pre-May cash rate of 2.98% with May, June, July, August, September, October, November, December and February cash rate increases applied). Repayments rounded to the nearest whole dollar.
Cost of living an increasing source of “distress” for Aussies
Suicide Prevention Australia, the national peak body for Australia’s suicide-prevention sector, released its latest Community Tracker figures this week, and the data paints an alarming picture of how we’re coping with the current crisis.
According to a survey by the group undertaken in February, almost half of Australians – or 46% of respondents from a representative sample of 1,024 adults – reported “elevated distress” due to the ongoing cost of living crisis.
The survey suggests that three areas in particular – cost of living and personal debt, housing access and affordability, and unemployment and job security – are likely to weigh particularly heavily on Aussies’ minds over the next 12 months.
Suicide Prevention Australia CEO Nieves Murray said the results are concerning, telling Canstar: “Our findings once again prove the clear link between the impact of rising economic and social pressures and distress levels in the community.”
She urged the RBA board to consider the “human, not just economic, wellbeing” of Aussies when raising rates, saying “we’re deeply concerned about the impact that cost-of-living is having on Australians.”
Aussies “skipping meals” to get by as inflation outpaces wages
It’s not just home loan rates that are more expensive in 2023 – you may well have noticed the cost of your supermarket shop going up, and one of Australia’s largest unions has accused businesses of gouging consumers at the checkout and contributing to inflation.
The effects are being felt all over, with major charity Foodbank reporting an increasing number of Aussie mortgage-holders are skipping meals to get by financially, with the cost of living crisis becoming a “cost of surviving” crisis for some.
Last year, RBA chief Philip Lowe warned that a “wage price spiral” could see inflation rise even higher if average wages were to increase, but with wage growth stagnant and inflation still biting, it would appear that rising wages are not the cause of the current crisis.
ACTU secretary Sally McManus has instead blamed a “greed price spiral” for putting the squeeze on Aussies, arguing that inflation would not be as severe as it currently is if businesses were not drastically raising prices.
McManus accused a number of Australia’s largest companies of making “eye-watering profits” as customers feel the pain.
“Inflation is being fed by these companies putting up prices far more than they need to,” she said.
“Wage growth is clearly not contributing to inflation. Any wage rises in 2022 and early 2023 have been eaten up by price rises and interest rate rises.”
Aussies warned to “batten down the hatches” with rate rises likely to continue
New Canstar research found that one in 10 mortgage holders and renters report having missed at least one mortgage repayment, rent installment or another kind of bill since rates started rising in April 2022, and a further one in five reports they worry about missing a payment in the near future.
Canstar finance expert Steve Mickenbecker says the trend is “worrying”. He added that, while the current round of interest rate rises has been deployed to slow consumer spending, borrowers are shouldering “most of the burden”, and more than two thirds of mortgage holders are currently feeling financially stressed.
“Under-supply of rental properties also sees renters sharing the pain, with 65% of that group reporting feeling financially stressed,” he added.
“Unfortunately there will be no early relief, as a pause in rate increases will not mean imminent rate cuts. We are still five 0.25 percentage point interest rate increases short of the long-term average cash rate of 4.6%, and shouldn’t be counting on interest rates returning to the lows of the last few years.”
“It is time to batten down the hatches for a long haul of higher rates that in reality are only just returning to a more normal level.”
March 2023: RBA cash rate vs variable rate
How can you save on your home loan rate?
If your fixed rate home loan is about to come to an end, or even if you think you could be getting a deal than what you're currently paying, you can compare home loans with Canstar to see what your options might be, and if there's a more favourable deal out there for you. If you are thinking about refinancing your current home loan to a new lender and want to know more about the process and how it works, Canstar has a list of seven mistakes to avoid when refinancing, so you can be better prepared to strike a new deal.
Cover image source: ectorfusionart/Shutterstock.com
To get help 24/7, phone Lifeline on 13 11 14 or the Suicide Call Back Service on 1300 659 467. If you or someone you know are in immediate danger, phone 000 for emergency services.
This article was reviewed by our Editor-in-Chief Nina Tovey before it was updated, as part of our fact-checking process.

Alasdair Duncan is Canstar's Content Editor, specialising in home loans, property and lifestyle topics. He has written more than 500 articles for Canstar and his work is widely referenced by other publishers and media outlets, including Yahoo Finance, The New Daily, The Motley Fool and Sky News. He has featured as a guest author for property website homely.com.au.
In his more than 15 years working in the media, Alasdair has written for a broad range of publications. Before joining Canstar, he was a News Editor at Pedestrian.TV, part of Australia’s leading youth media group. His work has also appeared on ABC News, Junkee, Rolling Stone, Kotaku, the Sydney Star Observer and The Brag. He has a Bachelor of Laws (Honours) and a Bachelor of Arts with a major in Journalism from the University of Queensland.
When he is not writing about finance for Canstar, Alasdair can probably be found at the beach with his two dogs or listening to podcasts about pop music. You can follow Alasdair on LinkedIn.
The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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The comparison rate for all home loans and loans secured against real property are based on secured credit of $150,000 and a term of 25 years.
^WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.