RBA's rate rise biggest in two decades

Many homeowners are facing a significant increase in mortgage rates after the Reserve Bank lifted the cash rate by 50 basis points. It's the biggest rate rise in more than two decades and coincides with sharply rising gas and electricity prices, leaving many struggling.

The RBA predicts inflation, which currently sits at 5.1 per cent, will further increase this year before returning to the target 2 to 3 per cent range next year Source: AAP

The latest increase in interest rates is likely to send a shiver down the spine of many home-owners and buyers.

Coupled with rising electricity and gas prices, many will be facing a tough winter.

John Robertson, CEO of Foodbank in New South Wales and the A-C-T, says some families are going without the essentials.

There are around 3.5 million home owners across Australia, many of whom will be immediately affected by the interest rate increase from 0.35 per cent, to 0.85 per cent.

It's the largest rate rise since the year 2000, and just one of a handful of times the rate has risen since.

A statement from Reserve Bank Governor Philip Lowe says the key issue is rising inflation impacted by international and domestic factors.

Federal Treasurer Jim Chalmers says the situation will get worse before it gets better.

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