Households brace for triple cost of living blow hitting from Friday as mortgage, insurance costs to surge

Aussie households are bracing for a triple cost of living blow - which could cost anywhere from $159 to $318 a month - from Friday that could leave thousands “breaking at the seams”.

Mortgage holders have been warned the March interest rate hike comes into effect at the end of this week.

The RBA lifted the cash rate by a further 25 basis points from 3.85 to 4.1 per cent, on March 17, with all four major banks passing it on in full starting from March 27.

According to Finder, homeowners with a $500,000 mortgage on average will need to find an additional $159 a month following the back-to-back rate hikes.

For those owing $750,000, repayments will rise by $238 and a mortgage holder owing a bank $1m will now have to find an additional $318 a month in repayments.

Fast forward to April and households will be hit by the sharpest rise to health insurance premiums since 2017.

In February health minister Mark Butler approved the fastest rise to private health insurance premiums since 2017, up an average of 4.41 per cent.

But this is just an average with individual policy types varying.

Insurance policies are based on a tier system starting out with basic and going up to bronze, silver and gold – with prices rising according to the levels.

According to Choice gold-level cover with the big five would feel the sting the most, with an average rise of 13.3 per cent.

Choice health insurance expert Mark Blades warns over the last five years the government approved cumulative increases of 14.8 per cent to insurance policies.

Those on gold level cover a massive 71.1 per cent.

“The higher price increases for these Gold policies are partly caused by ‘phoenixing’, where insurers close older policies to new members and open new, identical policies with the same name at a higher price,” Mr Blade said.

“The government introduced legislation last month to outlaw the sneaky ‘phoenixing’ loophole used by insurers. Unfortunately, we are still seeing top-level cover becoming increasingly unaffordable.

Canstar’s data insights director, Sally Tindall, says there are multiple ways households budgets have been impacted.

“Between surging grocery bills, skyrocketing petrol prices, the end of electricity rebates and rising health insurance premiums, household budgets could well be breaking at the seams on the back of this news,” she said.

Canstar warns there is “very limited time to act” before another cost of living blow hits their wallets.

In its latest warning, Canstar warns Australians while health insurance bills will rise from April 1, those prepaying may need to act by March 25.

Ms Tindall warns the clock is ticking if Australians want to change these plans ahead of the deadline.

“If you wait until 31 March to decide, the decision might well be made for you, particularly if you’re wedded to paying by BPAY or direct debit,” she said.

“Pre-paying can potentially be a great opportunity to avoid the premium increase, but don’t automatically assume that’s the case.”

Most insurers allow customers to pre-pay their health insurance up to 12 months in advance at today’s prices, with funds such as HCF and HBF offering up to 18 months’ prepayment.

Three of the big five insurers require BPAY payments by 26 March, while some smaller insurers have even earlier deadlines of 25 March.

Ms Tindall says Australians should use this time to check their policy against others in the market.

“If you are committed to prepaying, it’s worth checking you’re on a competitively priced plan, because in some cases, switching might generate even greater savings – especially if you’re then able to prepay with the new insurer,” she said.

“However, know that paying a year in advance doesn’t lock you in to your insurer. If you do decide to switch later this year, your old fund should refund any unused portion.”

Ms Tindall says Australians should use this time to check their policy against others in the market.

“If you are committed to prepaying, it’s worth checking you’re on a competitively priced plan, because in some cases, switching might generate even greater savings – especially if you’re then able to prepay with the new insurer,” she said.

“However, know that paying a year in advance doesn’t lock you in to your insurer. If you do decide to switch later this year, your old fund should refund any unused portion.”