The fourth consecutive 50 basis point increase marks 225 basis points' worth of tightening to the cash rate since since May.
Not since April 2016 has the cash rate cracked the 2.00% mark, with the rate of 2.35% now sitting at its highest point in more than seven years.
For homeowners with an average sized mortgage, a 30-year 3.00% p.a. interest rate increasing to 5.25% p.a. over the past five months means paying an extra $795 in monthly interest costs.
PropTrack Senior Economist Eleanor Creagh said the fastest rise to the cash rate since 1994 has seen home prices falling across the country, with prices nationally now sitting 2.7% below their March peak.
“Today’s rate hike will further increase borrowing costs and reduce maximum borrowing capacities, pushing property prices further down," Ms Creagh said.
“Outside of the housing market, the economy has entered the tightening cycle with strong momentum.
"Although consumer confidence has fallen sharply, the labour market remains tight, the unemployment rate is at a 48-year low, spending is yet to slow, and business conditions remain strong."
Ms Creagh said the lagging effect of rate rises, the large share of variable rate borrowers ahead on repayments and some borrowers on fixed terms yet to expire, means many mortgage holders have not yet felt the impact of the initial rises.
Full financial year results for CommBank show Australia's largest bank has $117 billion in fixed-rate home loans expiring by the end of 2023.
CommBank Head of Australian Economics Gareth Aird said borrowers are yet to feel the impact of the RBA's rapid tightening.
"There is on average a three month lag between an RBA rate hike and when CBA borrowers on variable rate mortgages experience an increase in their home loan repayments," Mr Aird said.
"(This) largely explains why the official spending data has remained strong but consumer sentiment sits at levels associated with a recession."
Mr Aird said the 50 basis point increase in September is likely to be the last, before the RBA slims down to one further 25 basis point increase.
"Provided the RBA pauses for at least a few months, when the cash rate is 2.60% or 2.85%, the data will show there is no need to continue to take the policy rate higher," he said.
"The Australian economy is largely in the RBA's hands."
CommBank economists have previously tipped the RBA to cut the cash rate from a peak of 2.6% starting in late 2023, while Westpac and ANZ now expect a peak above 3% with cash rate cuts by mid-2024.
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