Households could be paying tens of thousands of dollars more on their annual home loan interest bill if the RBA hikes the cash rate in line with expectations.
New data from PropTrack has revealed where buyers face the biggest hit to their monthly interest bill, with experts warning the sharp U-turn in forecasts may catch many recent buyers off guard.
But industry professionals say one segment of buyers is viewing the uncertainty as a good opportunity, and are preparing to jump in while others sit on the sidelines.
Jump ahead to see how much another two rate hikes could cost buyers across the country.
The RBA has already delivered two rate hikes in February and March, with markets now pricing in another two increases by year-end as soaring fuel prices flow through to everything from travel costs to transport and groceries.
A buyer purchasing a typical house across parts of Sydney, Brisbane, Melbourne and Perth could see their annual interest bill rise by more than $10,000 if two more 0.25 percentage point interest rate hikes are delivered by the RBA.
The biggest dollar hit will be seen in Sydney’s pricey waterside suburbs, where a typical home costs several million dollars.
But even those at the more affordable end of the market could see their interest bill rise by thousands of dollars over the course of the year.
A recent borrower who put down a 20% deposit on a median priced Australian home – which reached $908,000 in March according to PropTrack – would see their interest bill jump by $2,775 annually with two more interest rate hikes.
That’s on top of the two rate hikes already delivered this year, taking the total annual hit to more than $5,600, compared to before the RBA began lifting rates.
Recent buyers in affluent beachside suburbs will see the biggest dollar hit to their monthly mortgage repayments, but lower income households will likely face greater financial pressure. Picture: realestate.com.au
REA Group executive manager of economics Angus Moore said more affordable housing markets were also experiencing faster price growth than the higher end of the market, meaning buyers in these regions are having to stretch their budget further to purchase a home.
“More expensive areas are going to see bigger increases in mortgage repayments simply because the homes are more expensive and carry larger mortgages,” Mr Moore said.
“But these are high income areas, and in many cases those households probably have more capacity and resources to manage those costs.
“So it's not the case that these areas are going to be hardest hit financially.”
Recent buyers who have not yet built up significant equity or savings buffers now face the difficult double whammy of rising mortgage costs as the price of fuel, food and other essential goods also rise.
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Mortgage Choice broker Richard Brown said many borrowers who jumped into the market late last year would be caught out.
“I speak to borrowers every single day and through last year all of the commentary was about interest rates coming down, so most people's expectations were that they were coming down,” Mr Brown said.
“So will they be they caught out? Yes, definitely. People are paying hundreds of dollars or more a month now in repayments than they would have been expecting.”
Investors get their ducks in a row
Market momentum in some major capital cities has started to cool as buyers wait for more clarity on how far interest rates could rise.
Mr Moore noted auction clearance rates had softened over the past month, and property price growth has eased from the strong pace set over 2025.
“We had expected to see a slower pace of home price growth this year than we saw last, and that was when rates were expected to be relatively stable,” he said.
“With two hikes already, and another two looking likely, that will be a headwind for home prices.”
More affordable suburbs have seen the strongest price growth in recent months. Picture: realestate.com.au
But one segment of the market is using the lull as an opportunity to get their ducks in a row now, according to Mr Brown.
“When there's talk of interest rates going up other people are more hesitant, so it's a time when investors can actually buy really well,” he said.
“Whenever there's uncertainty, there's opportunity, and investors are often in the best position because they've got property, they've typically got equity, they've got the scar tissue from seeing interest rates going up and down so they're experienced, so they're often more confident.”
He said the upcoming federal budget was a big factor in why many investors were sitting on the sidelines, as they await clarity over potential reforms to policies such as the capital gains tax discount.
“That's on the back of every new investor's mind, the capital gains tax and what's going to change.”
Real Estate Buyer’s Agents Association of Australia (REBAA) president Melinda Jennison said investors are adopting a wait-and-see approach ahead of the federal budget.
Streamline Property buyer’s agent and president of The Real Estate Buyers Agents Association of Australia Melinda Jennison agreed, noting many investor clients had adopted a wait-and-see approach.
“From the conversations we're having, people are just sitting on the sidelines waiting for some certainty - so not completely stopping their transaction plans, but just taking more of a wait and see approach,” Ms Jennison said.
“Probably more caution is being taken from property investors at the moment, simply because they want to be able to price in higher interest rates or price in any changes to the capital gains tax and negative gearing before they make a big purchasing decision.”
Investors were incredibly active in 2025 according to the recent PropTrack Westpac Investor Report, which found investors made up close to their highest share of home lending since 2017.
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