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Now that higher interest rates are a reality, many Aussies are looking to pay more each month for their home.

The RBA's second rate hike within four weeks has now pushed interest rates up to 3.5 percent, after wallowing at a 49-year '‘emergency low' for 19 months.

While the rate increase will likely put more mortgage stress on homeowners, RBA governor Glenn Stevens said the need for such a low interest rate setting has now passed.

"This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead, he said."

For many Aussie homeowners, however interest rates are more than just a calculated government initiative: many will find repayments harder to make, and will have to make more serious choices about where there money is going. Has the government made the right decision?

We want to know what you think:

How will the interest rate rise affect you?

Are you prepared to make bigger repayments?

What will you have to sacrifice to pay for your home?

Join the debate. Have your say.

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User comments

Of course interest rates will go up. The lowering of rates was nothing more than a temporary measure to cope with the financial situation at the time. It was obvious they were never going to stay at historic lows. I have just continued to keep my payments at the same level they were before the GFC. Americas low interest rates really gave them no where to go when the crunch came. I have to wonder, if we had our interest rates at the same low level, what the impact of the crisis would have been on us.

The rate rise will not affect me as I had the forward thught to fix my mortgage at 6.29% 6 months ago, I bought my modest unit 4 years ago at the age of 19.I dont earn more then $35,000 a year. I didnt borrow so that I was up to my neck in debt. And that is what is getting people into trouble. Only borrow and buy what you can afford. That is the problem with my generation and the one before me, we all want what we cant afford. In suming up. Only buy what you can afford and dont mortgage yourself to the hilt

Interest rates need to come up a little to even out the gap between what we pay for money and so people can get a fair return on their money invested. However the reserve bank pushed up interest rates before and caused massive problems when the economy was travelling well. They went too high too fast and the reserve bank got it wrong. Then the worlds economy crashed and they had to bring rates down to an all time low. The reserve bank need to take it slowly and not push rates up too quickly or they will stuff it up again, we are not out of the woods yet with the finanacial troubles and things can still go backwards very quickly. A couple of rate rises are needed and every home buyer should be able to cover them as we are well below previous interest rate levels.If you cant handle rate rises with interest rates this low then you should think about getting out now and selling up because you have over commited yourself and thats the worst thing you can do.

I BOUGHT A HOUSE MANY YEARS AGO WHEN RATES WERE AROUND 7-8% BUT FACTORED IN RISES OF UP TO 4 %. THE HOUSE WAS AFFORDABLE AND APPRECIATED WELL. AS A CONSEQUENCE OF BEING CAUTIOUS I NOW HAVE MONEY TO SPARE AND RISING RATES MEAN BETTER TERM DEPOSITS. I AM NOT A VULTURE WITH MULTIPLE (NIL ACTUALLY) INVESTMENT PROPERTIES WHO HAS FUELLED OUTRAGEOUS HOUSING PRICES.

Change a few laws on negative gearing and it will all come down.... to be on par with the rest of the world. Seriously, I much rather buy an apartment in New York than an apartment in Sydney - both around the same price!!!

I bought what i could afford and looked ahead.The rent i was paying before i bought my unit is the same i'm paying in mortgage repayments now.I have factored the rate rises into my repayments.The way i see it,once rate rises hit towards 9%+,the rent i was paying pays for the interest and i'm paying the principle so it's a win,win. Hopefully,people have bought what they could afford and factored in the rate rises.If not,the vultures will pounce. The australian dream=calculations,anxiety and debt.Good luck and admiration to the battlers who swim without bluebottles! LOL The lucky country?

Reading all comments so far I would have to disagree with the last posting stating. (Property will also make a recovery way before the sharemarkets). This statment is quite simple incorrect! Over the last 6 months the ASX has risen 50% and even blue chips like Macquarie bank have gone up 200%, whereas property has just been flat. In all recoveries or downturns the sharemarket always leads real estate its just a basic investment rule you can profit from, if you are clever enough....

Invest in both property and shares. Simple......We have made most of our money through property investing. Buy in the bad times [now] and sell when you start to see the majority of people getting greedy. Same basic principle with share portfolio's...when you see the greed, wait a small time and get out fast with your gains, dont wait to make another few dollars. Has worked everytime for me and my family over the years. Property will also make a recovery way before the sharemarkets do. Gold will continue to rise and silver will excell over the next 5-10 yrs as the usa prints more dollars and it becomes more scarce as a precious metal for manufacturing purposes. Watch this space......

Yes I agree with Ken in Sydney. Australian houses are the most overpriced in the WORLD. Why do we spend 30 or 35 years of our valuable life paying off a stupid loan? All we do is give ourselves mortage stress and for what? Shareholders in the big 4 banks are laughing all the way to the bank, its more sensible to get a dividend income from the banks instead of paying your loan and interest for 35 years. If you can't beat em you might as well join em!

Want to escape it? Don't buy a house in the first place, your better off renting like me and just investing your money in the big 4 banks.. That way you can earn a high tax free income fom a growing dividend stream for the rest of your life. Just pay rent and have excess income to retire early on.... No waiting to a riduculous 67 years old for the measly pension...

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