Illawarra home owners who recently purchased could be $134 worse off each month - just in time for Christmas.
On Tuesday, the Reserve Bank board decided to raise the cash rate target by 25 basis points to 4.35 per cent.
Figures compiled for ACM by comparison site Canstar show that in the Illawarra, where the median house price is $988,281, home owners could be stung $134 more each month as a result of the rate rise, with their monthly repayments increasing to $5383.
These calculations are based on an 80 per cent loan over 30 years, assuming the person was previously on an average variable rate of 6.98 per cent that has now increased to 7.23 per cent.
For Illawarra mortgage holders who took out a loan in January this year, they've faced a total of $489 in rate rises this year.
That has led many to look at refinancing including Jacinta and Blake Milligan who bought their first home, a property in Albion Park Rail in 2018.
"When we first bought our house we were both working full-time, and we would put in a certain amount of money to our mortgage on top of what was necessary," she said.
"As interest rates increased, that money went to the mandatory repayments and not additional repayments.
"We'd also gone from both of us working full-time jobs to me being on maternity leave, then I went back one day a week, and then I've gone on maternity leave again. You want your money to work as hard as it possibly can.
"So we were looking at a way of making our money work better for us."
They refinanced several months ago, and by changing lenders saved themselves a couple of hundred dollars per month.
"We ended up going for the one that was the lowest interest rate that was going to work for us," Mrs Milligan said.
She said they were now better placed to handle the prospect of future interest rate rises.
"When it all started to happen with the rate rises, you don't really know where it's going to end," she said.
"Refinancing gives you the option... You're not stressing as much about the increases, or sitting on the edge of your seat to see whether they're going to increase it or not.
"It gives you that little more flexibility."
Katrina Rowlands, managing director of Wollongong-based mortgage brokers Mortgage Success said the uncertainty surrounding potential interest rate rises had made many home owners in the region anxious.
She said the majority of clients they were currently helping were seeking two outcomes
"One is, a better deal with their existing lender. A prime outcome for us is if a client has a good deal that we've placed them in, and we can get their lender to meet the market, so there's no cost of moving, no angst of paperwork. That's a great outcome.
"But the second option is, please compare it to the market, and tell me whether or not that's good enough."
She said it was definitely worth the time and effort to review a home loan, as "at worst, it will confirm that you've made a good decision by staying with your current lender".
"For example, someone who has had a home loan for five years, the option could be to take it to a lower lender, and flick it back out to a 30-year term. The difference on that on a monthly living expense could be all that's needed to make it comfortable.
"Extending the term could make it comfortable, based on what's coming up in your life. Someone who was a first home buyer five years ago who's now in the process of having children, that difference per month of what could be $400-$500, is crucial."
In a statement, RBA governor Michele Bullock said inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago.
"The Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe," she said.
"Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks."
CoreLogic research director Tim Lawless said the decision to lift the cash rate by 25 basis points after four months of pauses is likely to disrupt confidence and take some further heat out of the housing market rebound.
He said the lift in rates combined with ongoing cost of living pressures and alarming geopolitical environment is likely to weigh on consumer sentiment, which is already in deeply pessimistic territory.
"Lower confidence could act as a drag on housing market activity, denting buyer demand at a time when advertised stock levels are rising across most regions.
"A rebalancing between buyer demand and advertised stock levels is likely to take some heat out of the housing upswing, which has already been losing some momentum, at least at a macro level, since the monthly rate of value growth peaked in May."
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