February cash rate rise: How Canberra households are dealing with interest rate rises

But many households are already feeling the pinch, forcing some to cut back on spending and rethink travel plans.

Modelling by comparison website Canstar shows the latest rate rise would add $138 each month to the repayments on a Canberra house, for someone who bought before the rate rise cycle.

Adding up the nine rate rises since May, that's an extra $1660 on top of previous monthly repayments.

The figures are based on the median Canberra house value from April of $1,070,220, according to data firm CoreLogic.

In his announcement on Tuesday, Reserve Bank governor Philip Lowe noted while some households have substantial savings buffers, others are "experiencing a painful squeeze on their budgets" due to higher interest rates and living costs.

Theodore residents Pam and Jon Reyes are currently building a home in Strathnairn but they won't be moving in upon completion as planned.

The interest rate rises have forced them to rethink their move.

"The initial plan was to live there once it's built, but I guess with everything that's happening around us, the interest rates, everything has gone up ... we will have to rent it out and stay here in our current home," Mrs Reyes said.

Mr Reyes said the family had also postponed an overseas holiday with their two children and reduced spending on streaming services and dinners out.

"We also cut down on some of the kids' extra curricular activities," he said.

"So yes, it affects the lifestyle a little bit but it is what it is. I'm pretty sure it's not unique to us, it's affecting every family, every person in Australia at the moment."

Mrs Reyes said it was "challenging to stay positive" while interest rates kept rising.

"We're just trying to focus our energy on the things that we can control. We have to plan, we have to strictly monitor our budget and our expenses," she said.

Loan Market Canberra director Nitish Kumar said some of the worst financial pain was yet to come for those with ultra-low fixed rates ending this year.

"It's going to have a huge impact on the economy, there's people whose repayments are going to double on what they've been used to," he said.

Mr Kumar said it was imperative mortgage holders were prepared for the increase.

"That's going to be, I think, what's going to impact the economy the most in the next six to 12 months: whether people can afford those repayments or not," he said.

"It might mean some investors looking at potentially selling their investment properties if they can't manage the cash flow but people need to be proactive with that if their fixed loans are finishing."

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CoreLogic research director Tim Lawless said the latest rate rise may push some borrowers beyond their ability to service a loan.

"Since October 2021, lenders have assessed new borrowers on their ability to service a mortgage under an interest rate scenario that is at least 300 basis points above their origination rate," he said.

"The latest lift in the cash rate will push these recent borrowers beyond their serviceability tests."

"Considering most lenders were showing mortgage arrears to be around record lows last year, it's likely some evidence of rising mortgage stress will start to emerge in 2023 under such substantially higher interest rate settings, with the potential for a more noticeable lift as further fixed rate borrowers migrate over to variable mortgage rates."

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