As the RBA lifted the official interest rate on Tuesday, one regional New South Wales couple said the dream of building a home has turned into a financial “hustle” they no longer want to maintain.

After the pair, 25 and 26, settled on land in September 2022, rising rates and cost of building materials decimated their initial budget.

“If we had known how much our repayments would end up, we never would have bought,” said the 25-year-old woman, who did not wish to be named.

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While they can currently cover their bills and groceries, the financial pressure has forced them to put major life milestones, like starting a family, on indefinite hold.

“My partner and I were expecting further rate decreases following the last one or two decreases we’ve had, so the current increase is definitely disappointing,” she said.

They have decided to sell their newly finished home and pivot to the tiny house movement due to “cost of living and lack of freedom”.

“Humans are not meant to live this way,” she says. “It’s causing a cascade of issues, health issues, a mental health crisis and the fact that so many people aren’t having kids because they simply can’t afford it.”

On Tuesday afternoon the Reserve Bank hiked rates for the first time in over two years in a blow to mortgage holders, who bear the brunt of dealing with an unexpected jump in inflation through the second half of 2025.

The widely anticipated decision marks the end of the shortest rate-cutting cycle in the RBA’s modern history, after three reductions in the cash rate target in February, May and August of last year.

The RBA’s governor, Michele Bullock, said in a Tuesday afternoon press conference that the rise is “the right thing for the economy.”

“It is best if we get inflation under control, and our instrument is the interest rate,” she said. “I understand that people with mortgages find that hard, but the alternative is potentially even harder,” she said.

‘Everything’ going up

Gold Coast first home buyer Jack Petzke settled on his first house in October 2025 with his partner, Alyshia Cater.

The couple, in their late twenties, have financial strategies to cope with the rising cost of living while paying off a mortgage, including an offset account and strict budgeting, even looking for ways to make additional contributions to their principal as interest rates climb.

Jack Petzke, first home buyer from the Gold Coast with his partner, Alyshia Cater. Photograph: Jack Petzke

“I’m the type of person that plans a lot … I use Excel to map out all our budgets,” he said.

With an upcoming wedding in May, financial pressure is compounded, forcing the couple to find a balance between milestone savings and mortgage security.

“The rate increase is going to cause everything to go up, I’ll need to revise our budget to make sure we’re still putting enough in on a weekly basis to cover all bills throughout the year,” Petzke said.

“It does put a little bit more financial pressure on us to make sure that we have got our ducks in a row.”

The couple’s mortgage broker, Lauren Hall at Loan Market, said “a quarter point increase could be around $100 extra per month for the average mortgage”.

“No one is eager to give their lender more money, but most people will have a buffer to absorb at least a couple of potential cash rate increases,” she said.

The CEO of the Mortgage & Finance Association of Australia, Anja Pannek, said the increased official cash rate would be felt by millions of borrowers.

“The overwhelming majority of mortgage-holders are on variable rate home loans and this will mean a hit to their finances,” Pannek said. “For an average household with a mortgage of $694,000, a 0.25% increase in interest rates equates to an extra $109 in monthly repayments.”

Feels like ‘punishment’

A 31-year-old Melbourne man, who did not wish to be named, bought his first home in October 2025. He said Tuesday’s rate hike feels like a “punishment.”

To secure his mortgage on a single income, he took a casual job alongside his full-time role, skipping travel, engagements and weddings to save.

Despite his caution in not borrowing to his “absolute maximum,” he now feels a mix of anxiety and anger.

“In this economy, you can never have too much money, especially on a single person’s income,” he said.

While he anticipated the possibility of a rise, he said “decision makers are punishing the wrong people for very little benefit.”

“The RBA made some pretty strong rate hikes a few years ago and it clearly didn’t do anything to adjust inflation,’” he said.

He said further rate hikes would be “a considerable lifestyle impairment”.

“It’s possibly damaging the economy further because people can’t spend money on other businesses or small discretionary things, like gifts.”

Pannek said mortgage holders looking to explore their options should go to the expertise of a broker.

Spiro Kolokithas, a broker and managing director of What if We Finance, agreed professional advice is far more valuable than “getting it from TikTok”.

He said the rate hike will have varying impacts on his 1,500 customers – depending on their stage of life – but doesn’t think there will be a “huge dent in borrower activity” from one rate rise.

“But if we start getting two, three, four rate rises, which would basically be the reversal of the rate cuts, we’re going to see a slowdown,” he said. “This will have a psychological impact on people and force them to budget more and think more.”