Imagine having to buy a new washing machine every single month.
That's the economic reality facing hundreds of thousands of Aussie homeowners who are staring down the barrel of consecutive interest rate rises alongside the already skyrocketing cost of living.
Analysis from RateCity.com.au shows that if the RBA hikes rates every month, borrowers will be facing a national cash rate of 2.10 per cent by Christmas.
For someone with a $500,000 mortgage, that's an increase in monthly payments of around $542 – roughly the cost of a new washing machine, servicing the car, visiting the dentist or buying a new pair of glasses.
Under the same scenario – which is now forecast by the nation's two biggest banks in CBA and Westpac – a person with a $750,000 loan will be looking at an $812 monthly increase on repayments, while someone with a $1 million loan will be looking at a $1083 increase every month.
It may seem odd that interest rates are being hiked at the same time as numerous other daily expenses, but AMP's Chief Economist Shane Oliver says the RBA had no choice.
"Having a still near zero cash rate when unemployment is 3.85 per cent and inflation is 5 per cent and still rising makes no sense. So the RBA is right to be 'normalising monetary conditions'," Oliver said.
"Inflation pressures are still building with surging electricity and gas prices, petrol back above $2 a litre, rents starting to rise rapidly and supermarkets warning of more price rises and increasing wage demands.
"It's looking likely that inflation will now rise to 7 per cent or so in the second half."
Oliver said while the data shows that households are well placed to weather multiple rate rises, it's inevitable that some will experience financial pain.
"While the household debt situation is not as perilous as some would have it – with household wealth up more than household debt and many households well ahead on their payments – many will experience a significant amount of pain from higher rates," he said.
"For example, RBA analysis indicates that about 25 per cent of variable rate borrowers would see a 30 per cent or more rise in mortgage payments from a 2 per cent rise in rates."
The top number cruncher now expects the cash rate to peak at 2.5 per cent, punching a sizable hole in the property market in the process.
"We expect that while the RBA will raise the cash rate to 1.5 per cent to 2 per cent by year end, the peak in the cash rate will come at around 2 per cent to 2.5 per cent by mid next year. This is well below money market expectations for a rise above 4 per cent," Oliver forecasts.
"Given that the latest RBA hike was roughly in line with our expectations we have made no changes to our cash rate forecasts. We continue to see average home prices falling 10-15 per cent over the next 18 months but this may now occur earlier and faster than previously expected."
RateCity.com.au research director Sally Tindall advised borrowers worried about their financial position to take action before it becomes an issue.
"While many borrowers have been preparing themselves for rising rates, they may not have expected the RBA would go this hard and fast," she said.
"If you don't think you can keep up with hikes of this magnitude, take action now. Start making cuts to your budget and consider refinancing to a lower rate while you can.
"In a couple of months' time, some people may even find they can't refinance their mortgage because they don't pass the banks' serviceability tests on the higher rates."
The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.