In a statement, RBA governor Philip Lowe said that inflation in Australia is "too high", at 6.9 per cent over the year to October.

"Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply," he said.

"A further increase in inflation is expected over the months ahead, with inflation forecast to peak at around 8 per cent over the year to the December quarter. Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand. Medium-term inflation expectations remain well anchored, and it is important that this remains the case. The Bank’s central forecast is for CPI inflation to decline over the next couple of years to be a little above 3 per cent over 2024."

"The Australian economy is continuing to grow solidly. Economic growth is expected to moderate over the year ahead as the global economy slows, the bounce-back in spending on services runs its course, and growth in household consumption slows due to tighter financial conditions. The Bank’s central forecast is for growth of around 1½ per cent in 2023 and 2024."

In conversation with Lawyers Weekly, Legal Home Loans director of sales Cullen Haynes said that the firm expects that banks will pass on today’s (6 December) increase to borrowers, within the week.

“The current average interest rate range for residential loans we are seeing is approximately between 4.5 per cent to 5.5 per cent, depending on the product and your borrowing profile,” he said.

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“Mortgage holders locked into historically low fixed rates should be aware that there will be a significant increase in repayments when their fixed term ends, which they may want to start budgeting ahead of time for.

“Anyone concerned about rising mortgage repayments and impact on household budgets should speak to their bank or broker about the best structure suited to their needs as soon as possible. We recommend doing this three months prior to your fixed term expiry.”

For those seeking new loans, he continued, borrowing capacity will be decreased.

“As an example, a family earning $200,000 per annum can now borrow approximately $277,300 less than they could in April 2022. Today’s increase will impact this further,” he warned.

“Buyers with existing pre-approval are advised to speak with their bank or broker to confirm any impact to borrowing capacity before making offers, as it may be decreased.”

However, he added, it is not all bad news.

“For those in a position to purchase, particularly first home buyers, this environment can present a great opportunity with less buying competition and property prices coming down.

“As long as you do the due diligence of being prepared and have a good broker by your side, now is a great time to make a move,” Mr Haynes concluded.