Western Australia is by far the most mortgaged state in Australia, but the latest rate rise does not mean it is all doom and gloom.
Yesterday's decision by the Reserve Bank of Australia to increase the cash rate target to 2.35 per cent means an average West Australian household will be paying an extra $621 on their mortgage each month.
That is below the national average of $653 though, because West Australian houses tend to be cheaper.
According to the most recent census data, West Australians paid $21 less towards their mortgage each month in August last year, compared to the rest of the country.
But Western Australia's low wage growth shows where a key source of pain is — that each year, people's wages tend to fall further back in real terms, leaving bills and mortgages taking up a bigger proportion of their budget.
And that is likely to leave local businesses hurting.
Western Australia's most-mortgaged suburbs
This map shows what proportion of homes in each Perth suburb were mortgaged, according to the most recent census.
At the top of the list are new suburbs like Brabham (82.7 per cent), Piara Waters (74.7 per cent) and Dayton (72.3 per cent) and at the other end of the scale are places like Bentley and Mandurah (both 16.1 per cent), and Murdoch (17.9 per cent).
Those suburbs with more mortgages will likely see residents left with less to spend, hurting some businesses.
But Bankwest Curtin Economics Centre research fellow Silvia Salazar said WA was generally in a better position than the rest of the country.
"WA has had some price increases in terms of dwellings in the last two years … but they have not been as much as they have been in the eastern states," she said.
"So even though there are more people who got mortgages during that period, at a higher value than … ever before, they are still better off."
Bookshop suffers drop in sales
In Aveley, part of Perth's mortgage belt where about two-thirds of homes are mortgaged, Madhi Chavoshi runs a Persian bookstore.
A few years back he said the store, which sells online and in-person, could move around $15,000 worth of books a week. Now he is down to just a fraction of that.
"Our business is getting down these days and I don't know why," he said.
Mr Chavoshi suggested growing expenses were placing a greater burden on people's shoulders.
With his own mortgage rising too, making ends meet is becoming more and more difficult.
He has now also taken on work as a photographer and become qualified as a disability support worker.
"Last night I just got a letter from the bank saying that I have to pay $600 more per month [for my mortgage]," Mr Chavoshi said.
"I do whatever I can, I have to keep my mortgage up there."
Tough times ahead as households rein in spending
Dr Salazar said as rising interest rates continued to bite, and people reined in their spending, businesses like Madhi's were likely to only struggle more.
"People are cutting into these discretionary expenditures that they didn't need, so having less coffee outside, less leisure activities," she said.
Premier Mark McGowan said yesterday while any increase would be another "blow" to people with mortgages, it was a "good thing" WA had such a strong economy.
"[There are] lots of jobs out there, so at this point in time we're not suffering from unemployment," he said.
"I expect our economy will continue to be the strongest in Australia, and probably the strongest in the world."
But Dr Salazar said that would be of little comfort to many West Australians.
"It means that to some extent we have a lot of the mining industries doing great, but whether that is really falling down into households, that's another story," she said.
"Of course the economy is doing great, and that means that more people are employed, but on the other hand if wages are not there is still means people will struggle to pay for those mortgages."
State has biggest gap between wage growth and inflation
That remains a key issue for the state, with ABS figures showing Western Australia has the biggest gap between wage growth and inflation of anywhere in the country.
That means as food, bills and other essentials continue to rapidly rise, they leave a smaller proportion of household budgets for everything else.
Shadow treasurer Steve Thomas still believes the state government should further reduce its fees and charges to help households.
Rather than freezing fees and charges in this year's budget, it increased each by less than inflation, meaning they slide backwards, and account for comparatively less than the year before.
"The McGowan government is rolling in cash, and it's time for him to step up and use some of that cash to look after the people of Western Australia," Dr Thomas said.
"It's now time for him to freeze those charges until we get some sort of stabilisation."
Warning over providing economic stimulus
Any moves like that would have to be carefully calculated though, according to Dr Salazar, because they risked working against what the Reserve Bank was trying to achieve, which was to stop people spending.
"If you are thinking about giving an extra stimulus to households, then the RBA will feel that they have to increase rates even more, because that's the only thing that they can do," she said.
"So I think we have to be mindful of those sorts of things.
"To what extent are we actually reaching those households that need [it], and just not giving more stimulus to the economy and ending up with more inflation?"
