RBA lifts rates to 4.25 per cent

THE Reserve Bank of Australia (RBA) has raised the official cash interest rate by 25 basis points to 4.25 per cent

The RBA board met in Sydney on Tuesday to decide whether to lift rates for the fifth time in six meetings, a move largely predicted by economists and financial markets.

Major commercial lenders, including the big four banks, are expected to follow the Reserve Bank's lead in the next few days, adding further pressure to household budgets across the nation.

The jump from four per cent to 4.25 per cent will see monthly repayments on an average $300,000 home loan rise by $50.

The news for borrowers is expected to get worse, with most experts expecting rates to climb to at least five per cent by Christmas.

This would add $200 a month to average home loan repayments.

Borrowers already copped a rate rise in March, which followed three at the end of last year.