Home buyers are in line for a Christmas break from rising interest rates, with the Reserve Bank tipped to freeze the official rate next month after lifting it by 25 basis points yesterday.
Australians with an average home loan about $300,000 would need to find $46 extra a month to cover mortgage repayments after the official interest rate was set at 3.5 per cent yesterday.
ANZ was the first of the four big lenders to match the 0.25 per cent rise the central bank's second increase in the official rate in as many months.
The Commonwealth, National Australia Bank and Westpac followed suit, all announcing plans to increase the standard variable mortgage interest rate by 25 basis points.
The big four will now charge interest rates ranging from 6.24 per cent to 6.31 per cent on variable home loans.
Treasurer Wayne Swan warned interest rates would continue to rise.
''Today's decision is a tough one for Australian families and businesses, but it's also another indication that rates could not stay at 50-year emergency lows forever,'' MrSwan said yesterday.
''Because the economy is recovering, we'll see changes to rates from time to time.''
Opposition Leader Malcolm Turnbull blamed the Government's ''reckless spending'' for the interest rate rise.
''This is a trend of interest rate rises which will continue for some time that is certainly what the Reserve Bank is getting us ready for,'' MrTurnbull said.
''And the fact is that they are going up faster and higher than they would otherwise need to be if the Government was more responsible in terms of its spending.''
Reserve Bank governor Glenn Stevens reiterated economic recovery would mean the official interest rate went up.
''With the risk of serious economic contraction in Australia now having passed, the board's view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker,'' MrStevens said in a statement.
''The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead.''
A range of economists said these comments suggested the Reserve Bank was unlikely to lift the interest rate by 50 basis points in the near future. It also increased odds that the central bank would leave the rate unchanged when the board met in December.
CommSec economist Craig James said the Reserve Bank ''hasn't sought to frighten the horses with the latest rate hike''. ''We expect the next tranche of rate risks in February and March 2010,'' he said.
A similar point was made by Stephen Walters from JP Morgan and Ray Attrill from 4Cast a financial markets research group.
Mr Attrill said it was ''curious'' that the central bank made reference to the October and November meeting in yesterday's statement.
''We see no reason why they should pause any time soon, but by referencing October and November it does raise the possibility that they are offering a signal that they are going to now pause and wait until February,'' Mr Attrill said.
''I would read it to say that they are raising the possibility that they think they will pause in December.''
But TD Securities believed a 0.25per cent increase was still possible before the end of the year.
Australian Chamber of Commerce and Industry spokesman Greg Evans called for caution on interest rates given the ''unusual degree of uncertainty when gauging the underlying performance of the economy''.
''At this stage in the cycle, economic recovery is still more forecast than real,'' Mr Evans said.
with AAP