The Reserve Bank increased the rate by 25 basis points to 4.25 per cent following its monthly board meeting.

The rise will add about $48 a month to repayments on an average mortgage of $300,000.

Alatalo Bros land sales manager Rod Jones said he did not expect housing demand to slow as a result of the rate rise.

“Rates are still not really high so I don’t think we’ll see a slow in demand,” Mr Jones said.

He said it was more likely the rise would hurt those who had already taken out loans and purchased homes.

“It will hurt those already with a loan and house as they have to find the money to pay for the increase.”

General manager of SouthernVale Homes Peter Sproule agreed the rise would be tough on first-home buyers.

“Second or third home buyers expect and can accept increases. It’s first-home buyers who got in quite tight, spurred on by the first home buyers grant, that it affects,” Mr Sproule said.

He urged Border home owners who had utilised the first-home owners grant to hang in there.

“Lots of people have used the grant to get into the property market which is a huge step, and if they can hold on that’s the best option,” he said.

Mr Sproule welcomed the rise and its potential to slow down housing demand as an opportunity to meet current orders.

“It will have an effect on the region but we need to slow down and catch up with the deadlines we already have,” Mr Sproule said.

ANZ, Commonwealth Bank of Australia and Westpac were the first to announce interest rates increases yesterday, matching the central bank’s increase.

Meanwhile major Border banks have said they will see how the market responds to yesterday’s rise before announcing their revised rates next week.

“Our standard approach is to spend about a week looking at what the RBA has done, what is happening internally, and what our competitors are doing,” Michael Mack, deputy chief executive of WAW Credit Union said.

He said WAW would most likely announce its revised rates next Wednesday.

Hume Building Society chief executive officer Andrew Saxby said the bank’s rates were also under review, with an announcement likely on Monday afternoon.

He said he believes Hume will follow the Reserve Bank rise of a quarter of a per cent.