The hidden home costs rising faster than your mortgage

Home owners facing another rate rise wondering how they're going to make ends meet. But even those who have paid off their mortgage are counting the cost of everyday life and hoping they can keep the bills paid.

This week, the Reserve Bank of Australia lifted the cash rate by 25 basis points to 4.10 per cent, the second of back-to-back hikes amid persistent inflationary pressures.

The cash rate hike will have a major impact on borrowers, making it a tough time financially as higher mortgage repayments become the norm. Calculations from Finder based on the average loan repayments for a loan of $736,259 suggest that the average borrower will have to pay $118 more per month, or $1,416 per year.

But beyond the mortgage, the cost of everything else related to home ownership has been rising as well, and there is simply nothing left in the budget to absorb it.

In fact, every major household cost has outpaced wages. Home and contents insurance alone has risen by nearly three times the rate of pay.

Read more: Rates are up but is now the time to refinance

Not keeping up

While wages have risen by 19.2 per cent since 2020, inflation has risen by 29.7 per cent, meaning Australians have lost around 10 percentage points of purchasing power in five years.

Analysis of data from the Australian Bureau of Statistics data paints a pretty grim picture.

The standout cost increases include:

. Home and contents insurance up 51 per cent, from $1,940 to $2,938 annually

. Electricity up 23.4 per cent out of pocket, but 44.1 per cent at true market price, with a record 32.2 per cent spike in the past year alone as government rebates ended

. Health insurance up 19.33 per cent since 2021, with the 2026 rise of 4.41 per cent the steepest yet

. Internet up 23.2 per cent since 2020, with the sharpest jump coming between 2024 and 2025

The monthly cost of internet has risen by 23.2 per cent between 2020 and 2025, electricity has risen by 23.4 per cent, home and contents insurance premiums have experienced a rapid surge between 2020 and early 2026, with average costs rising by 51 per cent between 2020 and early 2026.

Read more: Rate rise confirmed: Here is how much your mortgage will now increase

Stress test

The cost of living in a house has become so expensive that a staggering 84 per cent of Australians experiencing bill stress over the last 12 months, with three in 10 reporting extreme levels.

ING research into bill shock follows a significant rise in utility costs over the last 12 months, with electricity bills rising by 13 per cent and gas bills by 4.3 per cent.

The data also reveals the point at which the average Australian begins to feel financially stressed about their monthly household bills (including rent, electricity, insurance, water etc) is when the total bill exceeds $2,021.

No rent relief

Ray White's chief economist Nerida Conisbee says higher interest rates on the back of the recent cash rate rise will do nothing to calm rental growth and may also further discourage new housing construction.

The good news is that those who can hold steady will see the value of their home continue to rise, Conisbee says.

"Australia's housing market has remained resilient despite higher interest rates, Prices rose strongly in 2025, supported by population growth and constrained supply," she said.

"Higher borrowing costs will limit borrowing capacity and slow price growth in 2026, but the underlying shortage of homes means upward pressure on prices and rents is likely to continue."

Power in switching

Being sure to switch electricity and insurance providers at least once a year can save homeowners hundreds a year, says Kate Browne, head of research and insights at Compare Club.

"The rule of thumb with energy is that if you've been with the same energy supplier for more than a year, then there's a very good chance that you're overpaying for your electricity. In deregulated markets, we're seeing savings of $600 a year in NSW, $300 in Victoria and around $502 in the Australian Capital Territory," Browne says.