Australian mortgage holders face pressure from rising interest rates, prompting calls for the RBA to pause hikes.

Recent wage decisions, including a higher minimum wage, are expected to add modestly to inflation and sustain wage-price pressures in services.

Inflation remains above target, with headline at 4.2% in April and the trimmed mean at 3.4% for the year to April, both above the 2-3% target.

Accumulated rises have lifted monthly repayments on a typical loan of about $736,000 by roughly $342, as the cash rate moved from 3.6% to 4.35%.

Ahead of the June rate decision, analysts expected rates to be held, though some foresee further hikes in August and September, potentially pushing the cash rate toward 4.85%.

Inflation pressures persist, with Calls that rates could rise again if inflation surprises to the upside, due to pass-through effects in fuel, housing, dining, and services.

There are warnings that continued hikes could damage the economy by worsening unemployment, and concerns that the RBA may underestimate household strain amid other cost-of-living pressures.

Bank economists remain divided about policy, with NAB and Commonwealth Bank seeing possible rate cuts in 2027 after holding through late 2026, while HSBC expects rates to stay on hold through late 2026 before potential cuts in 2027.

In after-tax terms, rate increases are costly, requiring about $6,000 more annual income and forcing households to cut back on holidays and family activities.