A rate rise today is now almost certain. However, what is up for debate is by how much official rates will rise.
Most economists are tipping for a 25 basis points increase, but there are still a few who think 50 basis points is not off the cards.
The official cash rate currently sits at 3.25% after being increased from 3% in October. If rates rise by 25 basis points the official interest rate will then sit at 3.50 per cent.
Banks will no doubt increase mortage rates as well. When the Reserve Bank of Australia increased the official rate in October, lenders moved within days to increase home loan interest rates by the full 25 basis points.
This round of increases will make it's mark on home owners. While banks believe most homeowners will handle today's expected rate rise well, there are some who will struggle and mortgage stress and defaults could rise. The Reserve Bank announcement, tipped to be made just hours before the start of the Melbourne Cup, is expected to add about $20 a month to the cost of an average mortgage.
Most lenders are now offering standard variable rates on mortgages of between 5.60% and 5.80% which is still considerably lower than the high's seen in late 2008.
Rates for fixed rate loans have also been rising.
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