The RBA Raised Rates 13 Times. Here Is Exactly What It Cost You.
The RBA raised the cash rate 13 times between 2022 and 2023. We calculated the exact dollar cost to Australian mortgage holders — and the numbers are brutal.
12 April 2026
The RBA Raised Rates 13 Times. Here Is Exactly What It Cost You.
In May 2022, the Reserve Bank of Australia began one of the most aggressive interest rate hiking cycles in Australian history.
By the time it paused in late 2023, the cash rate had risen from 0.10% to 4.35% across 13 consecutive increases. Every increase was announced calmly. Every increase was described as "necessary." Every increase landed directly in the mortgage repayments of 3.2 million Australian households.
Most Australians have a vague sense that their repayments went up. Few know the exact number.
Here it is.
The Exact Dollar Cost — By Loan Size
The table below shows the monthly repayment increase for a standard 25-year principal and interest mortgage, based on the full 4.25% rate increase applied to the average variable rate.
| Loan Balance | Monthly Repayment Increase | Annual Extra Cost | 3-Year Extra Cost |
|---|---|---|---|
| $400,000 | +$983/month | +$11,796/year | +$35,388 |
| $500,000 | +$1,228/month | +$14,736/year | +$44,208 |
| $600,000 | +$1,474/month | +$17,688/year | +$53,064 |
| $750,000 | +$1,842/month | +$22,104/year | +$66,312 |
| $1,000,000 | +$2,456/month | +$29,472/year | +$88,416 |
The median Australian mortgage balance at the start of the rate cycle was approximately $574,000. That household has paid roughly $51,000 more over the past three years than they would have at the pre-2022 rate.
$51,000. Gone. Not to the principal. Not to equity. To interest.
What $51,000 Could Have Been
To make this concrete:
$51,000 invested in the ASX 200 in May 2022 would be worth approximately $68,000 today.
$51,000 added to your mortgage principal would have reduced your loan term by nearly 4 years.
$51,000 is the average Australian household income for 14 months.
Instead, it went to the bank.
The Banks Did Fine
While Australian mortgage holders absorbed $51,000 in extra interest costs, the Big Four banks reported combined profits of:
| Year | Combined Big 4 Profit |
|---|---|
| 2022 | $28.1 billion |
| 2023 | $32.4 billion |
| 2024 | $30.8 billion |
Net interest margins — the gap between what banks pay depositors and charge borrowers — expanded significantly during the rate rise cycle. The rate rises were passed on to mortgage holders within days. Rate cuts, historically, take weeks to months to reach borrowers.
Who Got Hit Hardest
Not all Australians felt this equally. The distribution of mortgage stress landed heaviest on:
First home buyers who purchased in 2020–2021 — the pandemic cohort who bought at peak prices with ultra-low fixed rates that expired directly into the rate rise cycle. Many went from a 2% fixed rate to a 6.5%+ variable rate in a single refinancing event. Their repayment increase was not $983 per month. It was closer to $2,500.
Outer suburban and regional buyers — who stretched furthest to afford entry into the market and had the least buffer in their household budgets when repayments increased.
Single income households — who had no second income to absorb the shock and faced the choice between mortgage repayments and everything else.
The Psychological Cost Nobody Talks About
The financial cost is measurable. The psychological cost is not.
Mortgage stress — defined as spending more than 30% of household income on mortgage repayments — affected an estimated 1.5 million Australian households at the peak of the rate cycle. The flow-on effects included:
- Reduced spending at local businesses
- Deferred medical and dental appointments
- Cancelled holidays and discretionary purchases
- Relationship strain documented in separation statistics
- Increased presentations to financial counselling services
The National Debt Helpline reported a 47% increase in calls between 2022 and 2023. These were not people making poor financial decisions. These were people whose mortgage repayments had increased by $1,000 per month with six weeks notice.
Are Rates Coming Down?
The RBA cut the cash rate to 4.10% in February 2026 — the first cut since the hiking cycle ended. A second cut is widely anticipated by mid-2026.
The impact of a full 1% reduction in the cash rate, if passed on in full:
| Loan Balance | Monthly Saving | Annual Saving |
|---|---|---|
| $400,000 | -$232/month | -$2,784/year |
| $500,000 | -$290/month | -$3,480/year |
| $600,000 | -$348/month | -$4,176/year |
| $750,000 | -$434/month | -$5,208/year |
| $1,000,000 | -$579/month | -$6,948/year |
For the median borrower, a 1% rate cut returns approximately $290–$350 per month. Welcome, but a fraction of what was taken.
What You Should Actually Do Right Now
1. Know your exact number
Most Australians know their repayment has gone up. Far fewer know the exact dollar amount they have paid in additional interest since May 2022. Calculate it. The number is clarifying.
2. Refinance if you have not already
The average Australian mortgage holder who has not refinanced since 2021 is likely paying 0.5–1.5% more than the most competitive rate currently available. On a $600,000 loan, that is $250–$500 per month in avoidable interest. Call your bank this week and ask for a rate review. If they will not match the market, refinance.
3. Direct the savings somewhere intentional
When rates fall and your repayment decreases, the default is to absorb the difference into general spending. The households that build wealth do the opposite — they keep paying the higher amount and direct the difference to offset or principal. A $300 monthly rate cut redirected to your mortgage principal reduces a 25-year loan by approximately 3 years.
4. Track where your money is actually going
The rate rises compressed household budgets to the point where most Australians do not know exactly where their discretionary spending went during the past three years. Connecting your accounts to an AI finance tool like MyAiBank surfaces exactly where money is going — subscriptions, spending patterns, and cash flow — so rate cut savings can be deployed strategically rather than absorbed invisibly.
The Number That Matters Going Forward
The RBA is expected to cut rates 2–3 more times in 2026. The total potential saving for the median borrower across those cuts is approximately $600–$900 per month compared to the 2023 peak.
That money will arrive quietly. In most households it will disappear just as quietly — absorbed into lifestyle, invisible in the budget, gone by the end of the month.
The Australians who come out of this rate cycle ahead are the ones who see those savings clearly, make a deliberate decision about where they go, and put them to work rather than spending them.
The tools to do that exist. The question is whether you use them.
Frequently Asked Questions
How much did the RBA rate rises cost the average Australian mortgage holder? Based on the median Australian mortgage balance of approximately $574,000 and the full 4.25% rate increase applied between May 2022 and late 2023, the average mortgage holder paid approximately $50,000 to $55,000 more in interest over the three years of the rate cycle than they would have at pre-2022 rates.
Are Australian mortgage rates coming down in 2026? Yes. The RBA cut the cash rate to 4.10% in February 2026 and further cuts are widely anticipated through 2026. However rate cuts are typically passed on to borrowers more slowly than rate rises. If you have not asked your lender for a rate review, do so immediately.
What is mortgage stress in Australia? Mortgage stress is generally defined as spending more than 30% of gross household income on mortgage repayments. At the peak of the 2022-2023 rate cycle, an estimated 1.5 million Australian households were in mortgage stress.
Should I fix or stay variable on my mortgage in 2026? With rates expected to fall further in 2026, most economists and mortgage brokers advise against fixing now. Variable rates are positioned to benefit from anticipated RBA cuts. However this decision depends on your personal risk tolerance and financial situation — speak to a licensed mortgage broker before making changes.
How do I calculate how much the rate rises cost me personally? Take your loan balance at May 2022, multiply by 4.25%, divide by 12 to get the approximate monthly interest increase, then multiply by the number of months since. This gives a rough figure. A more accurate calculation accounts for your reducing principal and the timing of each individual rate rise.
Also on MyAiBank
Ready to take control of your finances?
Join MyAiBank and get AI-powered financial insights for $14.99/month. No lock-in, cancel anytime.
Start Free Trial →