The Reserve Bank of Australia (RBA) has put a healthy housing market in jeopardy by lifting official rates, mortgage brokers say.

The RBA on Tuesday raised the cash interest rate by 25 basis points to 3.25 per cent.

Loan Market Group said the lift would hurt consumer and business confidence and possibly have an adverse effect on a national housing market, which has so far weathered the global economic downturn.

However, the mortgage broker said there would be no significant immediate financial effect on Australian households paying off an average home loan of $300,000.

“An increase of 0.25 per cent means another $46 a month for someone repaying a $300,000 loan, but it has a far more severe impact on the mentality of mortgage holders,” Loan Market Group chief operating officer Dean Rushton said.

Mr Rushton said the economy would have been better prepared for the RBA to raise rates again in early 2010.

Resi Mortgage Corporation said the decision by the RBA to lift official interest rates was not the early Christmas present borrowers had hoped for.

Resi head of consumer advocacy Lisa Montgomery said although borrowers would not like hearing the news of higher rates in the lead-up to Christmas, many Australians were more financially prepared for the effect of rate rises than they were before the credit crunch.

Resi said mortgage holders on an average loan should remember they were still around $700 better off than this time last year.

Mortgage Choice said Australians with a home loan need to be prepared for further official interest rate hikes in the next few months.

“Borrowers should prepare themselves for a festive season featuring higher mortgage repayments and know where to look for signs of upcoming interest rate movements,” Mortgage Choice said.

Financial comparison website Rate City said most Australians with a variable home loan should be able to afford a 25 basis point interest rate rise.

“So there is no need to panic by switching to a fixed rate because you could still save a lot more money by sticking to variable.”

The Housing Industry Association (HIA) said the rate hike would do nothing to alleviate the chronic undersupply of new housing in Australia.

“There is a big risk that the increase in official rates will blunt consumer and business confidence that is crucial to the prospects for an economic recovery,” HIA chief economist Dr Harley Dale said.

Dr Dale said although there are some encouraging signs the economy has avoided falling off a cliff, it is still far too early to call an economic recovery.

AAP