On Tuesday, May 3, the RBA announced it was raising the cash rate target by 25 basis points, or 0.25 per cent, taking the figure from 0.1 per cent to 0.35 per cent.

This was the first rise in the cash rate for over a decade, and comes in response to higher than expected inflation figures.

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Soon after the announcement, banks and other financial institutions announced they were passing on the cash rate rise in the form of higher interest rates on loans and savings accounts, with the Commonwealth Bank the first to do so for loans, with the major banks following suit and passing on the 0.25 per cent rate rise.

On Friday, Wollongong-based IMB Bank announced that it was also hiking the interest rate on variable home loans by 0.25 per cent, effective from May 20.

With rising costs of fuel, groceries and other essential items, the interest rate rise will be an additional burden for mortgage holders, said economist and associate professor at the University of Wollongong Martin O'Brien.

"For a lot of families, this is a double whammy, in that they're already experiencing large increases in household items, and the mortgage is going to be added onto that list," he said.

IMB Bank CEO Robert Ryan said if homeowners would struggle to meet repayments, they should get in touch.

"While our interest rates have been at record lows, many borrowers have taken the opportunity to place themselves in a strong position to prepare for this change, but we also understand that some members may have concerns about how this rate rise might affect them," he said.

"Our team is ready to assist with any enquiries and I encourage members to speak with us if they need our guidance."

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Horizon Bank also passed on the 0.25 per cent increase to its variable rate home loans, with the change already in effect as of May 4.

For those looking to make a little bit extra off their savings, the field is a bit more varied. Commonwealth Bank initially did not say whether it would pass on the interest rate rise to deposits, but after Prime Minister Scott Morrison called on banks to raise their rates on deposits, increased the returns on some term deposits.

IMB Bank took a different approach and announced on Friday that the bank would double the rate rise and announced a 0.50 per cent increase on some term deposits, coming into effect on Monday.

"When making changes to our interest rates, we consider several factors, including market forces, the economic outlook, and how we can best balance the needs of all of our members, including those with loans and those who are saving with us. Our decision to lift variable rates reflects the consideration of all these factors and the historically low interest rate environment, which has in recent years benefited borrowers but reduced earnings on our members' deposit accounts," Mr Ryan said.

With the dominance of the big four banks in Australia, Mr O'Brien said the recent change in interest rates could be a starting point for borrowers and savers to look for a better outcome.

"Now's as good a time as any to be shopping around to see if you can get a better deal. You're going to be stuck with repaying your mortgage for a number of years, so if you can pay it back at a lower rate, why hesitate?"

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