Liam Dann: How much the rate rises will cost me

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Are you worried about the Reserve Bank decision today to raise the official cash rate? How will it affect you? Will you consider moving to a fixed rate? Contact the Herald with your story here.

Wait, so how much are these rate rises going to cost me again?

It can all seem a bit baffling especially when you complicate things with the myriad of choices about floating and fixed rates.

But really the formula is pretty simple and the Reserve Bank has seldom been as explicit as it currently is.

Based on current economic conditions we can expect the official cash rate to rise by one per cent before the election in September. (Including today's 0.25pc hike)

Now, every percentage point increase is going to cost you about $20 a week for every $100,000 you owe the bank.

So $400,000 mortgage? You'll be forking out an extra $80 a week and so on.

You might balance some of the cost by fixing or you might keep floating and soften the blow by paying a little more each time the rates rise.

But the sad reality is you can't avoid the cost. Especially over the long term. The banks will pass it on.

Whether you fix of float is a very personal decision which needs to be influenced by your income security and other factors like your appetite for risk.

It's a small comfort for mortgage holders, but is worth remembering, that the rates we've enjoyed for the past few years have been historic lows.

The mortgage savings we've had in this period were part of an economic stimulus programme for the economy.

They were an emergency response to the global financial crisis and the Christchurch quake. We can argue about the timing of the rises but a return to normal settings was inevitable.