Australian mortgagees on variable rate home loans have copped eight rate rises in a row, taking the cash rate from 0.1% to 3.1% in the space of eight months. And all four big banks have jumped into pile on the pressure. But it will only get worse next year, with borrowers on fixed rate loans forced onto more expensive fixed rate loans.

The AFR’s Karen Maley numbers it. “Just over one-third of all mortgages are fixed-rate loans, and about half of these are due to mature next year,” she reported. “That means these loan borrowers face the daunting prospect of their mortgage jumping from as low as 2 per cent to more than 6 per cent.”

If consumers don’t reduce spending on rising priced goods and services, then the RBA will keep piling on the pressure.

Right now, economists and markets expect two more rate rises next year but the CBA is at odds with that call.

This is what CommSec’s Craig James has come up with following the interest rate rise yesterday. “The RBA has implicitly signaled a willingness to pause in the tightening cycle today by noting that ‘the Board expects to increase interest rates further over the period ahead, but it is not on a pre-set course’. But the tweak in forward guidance was not as material as we anticipated, and, as a result, we shift our risk case to our base case.  We now expect one further 25bp rate hike in February 2023 for a peak in the cash rate of 3.35%.”

RBA boss Dr Phil Lowe alluded to his desire to watch the data. If we start to show the effects of these rate rises on our spending and then on the inflation rate, then he might say “my work is done” and no more rate rises are needed.

So to be clear: the market expects the rate rises to peak at 3.6% but the CBA thinks it will go from 3.1% now to 3.35% next year. There’s some thinking that the RBA could pause at the next rates meeting on the first Tuesday of February and then if inflation hasn’t kept falling noticeably, they could slug us again.

Given the importance of bowling over inflation, the RBA boss needs to be more down-to-earth and direct with many Aussies, warning them that if we don’t ease up on our spending, he will revert back to 0.5% rate rises.

We need some serious jawboning or scaring the pants off consumers to ensure we don’t have to endure so many rate rises that we end up in recession.

I agree with the CBA that the past eight rises will hit us with a bang sooner rather than later, so the RBA has to be careful that it doesn’t go too far. Monetary policy works with a long lag so I think it’s time for tough talk rather than too many more rate rises.

Of course, this is great news for savers but even savers don’t need a recession born out of too many rate rises, as this will bring interest rates down again.

This is how the ABC reported the bank’s reaction to the cash rate hike for both borrowers and savers.

Here's how the major banks have responded to the RBA's December decision so far. 

Westpac Bank

Westpac became the first of the big four to respond to the RBA's December decision.

Mortgage rate: Variable home loan interest rates increased by 0.25% from December 20. 

Savings rates: 

• Westpac Life: Total variable rate with bonus interest increased by 0.25 per cent to 3.75% on December 16.
• Westpac Spend&Save customers aged 18-29: Total variable rate increased by 0.35% to 4.35% on December 16.

NAB

The second of the big four to respond to RBA's December decision.

Mortgage rate: The standard variable home loan interest rate increased by 0.25% on December 16.

Unlike Westpac, NAB hasn’t yet announced an increase to savings accounts.

ANZ

ANZ is the third big bank to increase interest rates for its variable home loan customers following the RBA's cash rate rise.

Mortgage rate: Variable home loan interest rates increased by 0.25% from December 16. 

Commonwealth Bank

CBA was the last of the big four to respond to the RBA's decision.

Mortgage rate: The bank will lift its home loan variable interest rates by 0.25% from December 16.