RBA's rate hike to hit borrowers, how to ease mortgage pain?

The Reserve Bank of Australia's decision to hike interest rates by 50 basis points on 7th June, taking the cash rate target to 0.85%, has inflicted further pain on mortgage holders.

The mortgage holders' monthly repayments has raised sharply, while wage growth remaining sluggish.

However, the RBA is likely not going to stop at this. Australian inflation and interest rates are likely go up by "a lot more," and homeowners who recently took out a mortgage can't hold back the policy tightening process, former Reserve Bank Governor Ian Macfarlane said.

So, what can mortgage holders do in such difficult times? Here are some actions that mortgage holders can take immediately to lessen the pain.

1. Review income, expenses, debt, savings, and investments, and find out a way to reduce expenses.

2. Experts advise to compare the interest rates on your loan with other lenders in the market. Always focus on lenders which offer competitive rates.

Despite rate hikes, there would be lenders willing to keep their business rolling by offering sharper discounts to refinancers seeking to switch lenders.

3. If you are finding it difficult to pay increased repayments, it would be wise to request your lender, if feasible, to increase the tenure of the loan and reduce your monthly repayments.

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