More pain to come for mortgage holders, say economists

Mortgage holders are being warned to brace for at least two more interest rate rises despite a softening tone from the Reserve Bank on the cash rate.

The RBA lifted the official rate to 3.6 per cent last week, the 10th month in a row it's gone up.

While governor Philip Lowe indicated a pause was possible, RateCity research director Sally Tindall said on Monday more hikes were on the horizon.

Two or even three more rises were on the cards before any pause, she said.

"There's a significant amount of more pain still ahead," Ms Tindall told AAP.

"At a time when we have already had 10 rate hikes in a row, we are looking at 12 in 12 months."

Three of the big four banks, which include Westpac, NAB and ANZ, have forecast the cash rate to rise two more times to 4.10 per cent.

Should that happen, borrowers with a $500,000 mortgage would experience a repayments increase of $152 per month.

Since April 2022, before the hikes began, they would have increased by $1135 for a $500,000 loan or by $2269 for a $1 million loan.

Ms Tindall warned borrowers could be faced with variable interest rates from their banks as high as seven per cent, a far cry from levels of about two per cent during the height of the pandemic, when the Reserve Bank slashed the cash rate to historic lows.

"Variable borrowers have really been through the ringer in the last 10 or so months and hit with month after month of interest rates and mortgage repayments on the rise," she said.

"If (variable borrowers) haven't been keeping an eye on what their revert rate is likely to be, they'll be in for an almighty shock."

Dr Lowe said a pause on rates would occur if collective data suggested it was the right thing to do.

Key figures being monitored by the Reserve Bank include upcoming unemployment data, set to be announced this week, as well as inflation figures for the month.

Economists are predicting a recovery in jobs figures during February, following the unexpected loss of 11,500 jobs from the market in January.

Commonwealth Bank economists expect to see 45,000 jobs added to the economy when the data is released on Thursday with the jobless rate holding firm at 3.70 per cent and the participation rate lifting a touch from 66.5 per cent to 66.6 per cent. 

Inflation is sitting at 7.4 per cent, down from the high of 8.4 per cent in December.

While experts have predicted inflation has peaked, Ms Tindall said it was not enough to yet indicate a shift.

"Going down a full point would be music to the RBA's ears but you can't pull up stumps entirely based on one month of data," she said.

The Australian Bureau of Statistics will also release its monthly business turnover and household spending indicator on Tuesday.