Economic analysts are expecting the RBA to raise interest rates by 25 basis points for a fourth consecutive time today, taking the overnight cash rate to 4.0% from the current 3.75%.

This would, of course, lead to higher loan costs for consumers, including credit card repayments and mortgages, while according to a recent report from Fujitsu Consulting, homeowners are already feeling the pain of the previous hikes.

The Fujitsu Consulting report states that 377,960 Australian households are already under mild financial stress, able to meet their mortgage payments but having to cut back on other spending or run up their credit card balances. A further 25bp rate hike will cost these families an additional $50 in average monthly repayments, and roughly 26,000 of them will see their financial stress become severe, pushing them into the ranks of the 199,000 households already having difficulty meeting their mortgage payments.

NAB cheered its customers with a promise not to raise their retail rates beyond the RBA’s hike. However, the other major banks have not followed suit, and banking customers remember all too well that Westpac raised their retail rates by 45bp before Christmas, almost double the RBA’s tightening move.

With economic analysts expecting the RBA to raise rates by a full percentage point in 2010, many households are understandably worried about their mortgage holders’ response.

Treasurer Wayne Swan was also outraged by the higher rates charged by the major banks.

“That was totally unjustified, and the community backlash against those banks has been substantial, and I certainly hope they heed the warning,” he said.

Source: www.heraldsun.com.au