Jye bought a home in April. Then his mortgage repayments jumped $1000

The first cash rate arrived two days after he settled on his two-bedroom Botany apartment, and a second had followed before he made his first monthly repayment.

Smith’s monthly repayments are now $1085 higher, and that does not account for the latest increase – another 25 basis point lift on Tuesday which took the cash rate to a 10-year high of 3.1 per cent.

The small-business owner is worried about how much higher rates will go, but also relieved he did not borrow to his maximum capacity.

“[Interest rates] rose faster and sharper than I expected, I knew there would be a little lift and that informed my decision to buy at the $800,000 level, not at $1 million. I was thinking rates may go up 1 per cent this year, maybe 1.5, and … I remember thinking I can do that,” he said.

“I was so grateful …. that I didn’t [borrow] the full amount I could because I would have had to move out or sell it at this point.”

He’s not alone. Eight consecutive cash rate hikes from the Reserve Bank have put pressure on mortgage holders, increasing monthly repayments on a $500,000 loan by $888 since the start of May.

Like many, Smith has made lifestyle changes to meet higher repayments. He has swapped regularly dining out for more home cooking, stopped driving to work, cut back on impulse buys, and ditched plans for an overseas holiday. But he knows there are others who are far worse off.

“I’m not some battler, I’m just a bloke trying to live by myself … how much harder would it be for anyone else who is in a less privileged position?”

Smith is hopeful rates won’t rise much further. Were they to rise another 1 percentage point or more, he’d probably move and rent out the property, or even consider selling it.

Steve Mickenbecker, Canstar’s group executive of financial services, said higher repayments would roll out to home owners in the new year, and noted it could take up to three months for them to filter through.

Rates have now risen 3 percentage points since April, Mickenbecker said, effectively wiping out the serviceability buffer used to stress test households who borrowed at record low interest rates, pushing borrowers and lenders into unknown territory.

Mickenbecker expected there would be increased demand for refinancing next year, as households try to ease the pressure of growing repayments. He noted RBA data showed a 0.51 percentage point difference between the interest rates existing borrowers were paying compared to new customers – which could result in a saving of $155 per month on a $500,000, 30-year loan.

“The RBA talks about people who have built savings buffers … but some are just a little ahead and some are not ahead at all. More recent borrowers haven’t had a chance to get ahead … and they’re also starting to see equity decline,” he said.

He urged those facing financial difficulty, who were not in a position to refinance, to contact the national debt helpline and speak to their bank about a path forward.

AMP Capital chief economist Shane Oliver said buyers who purchased in recent years, particularly first home buyers, had borne the brunt of cash rate hikes.

“Everyone would be starting to feel the pinch, but it won’t have hit everyone the same … it’s really first home buyers or owner occupiers that got in, in the last five years, and who have taken on larger debt levels, who will be stretched most,” he said.