By Milla Webster
THE Reserve Bank of Australia (RBA) on Tuesday last week lifted its official interest rate for the first time in more than two years. For regional communities in Victoria, where families hold mortgages and local businesses rely on borrowing, the latest mortgage interest rise will be immediately felt.
The rise follows rate cuts throughout 2025 designed to support inflation easing and economic growth. The central bank increased the cash rate by 0.5 percentage points to 3.85 per cent, up from 3.6 per cent.
Australia’s major banks, including Commonwealth Bank, Westpac, National Australia Bank and ANZ, have confirmed they will pass the full rate rise on to customers. For typical borrowers, the increase is expected to add roughly $100 a month to repayments on a $600,000 mortgage.
That means home-loan costs for many variable rate borrowers will go up, stretching household budgets which are already weighed down by rising living costs.
Local real estate agents say the impact is already being felt in the property market.
Georgina Smith, a Kilmore-based real estate agent, said: “We have already observed immediate shifts in buyer behaviour. Purchasers who had previously submitted offers are now requesting extended consideration periods, as they reassess their financial position and recalibrate figures, particularly in relation to mortgage repayments and overall holding costs.”
First-home buyers will feel the pressure most acutely.
“Despite the availability of first-home buyer incentives, many first-home buyers are still finding it challenging to enter the market. Changes in interest rates have a significant impact on borrowing capacity, and even small adjustments can materially affect their ability to proceed with a purchase,” Ms Smith said.
Local real estate agents say tightening borrowing costs may soften buyer enthusiasm, particularly among first-home buyers and investors. They anticipate that “prices will stabilise rather than decline”.
Ms Smith said: “Historically, regional markets tend to follow metropolitan trends with a slight delay, so it will be important to monitor movements in metro areas. At this stage, I do not expect a downturn until the next RBA announcement, and I believe the market will remain relatively steady in the interim.”
Peter Hess, a Wallan-based real estate agent, said: “One rate rise will get buyers’ attention and generally rate rises don’t help market confidence … we’ll have to see what happens if there are more rises put in place.”
Despite this, Mr Hess said the Mitchell Shire market remained resilient, with prices still relatively affordable.
He added that buying continues to offer advantages over long-term renting, with investor activity increasing.
For households in regional Victoria, the key will be staying informed and planning ahead. Budgeting for higher repayments, reviewing loan options, and seeking financial advice can help cushion the blow of rising interest rates.