There was good news for homeowners last week as the Reserve Bank of Australia decided to hold the interest rate at 6.25%. The freeze means mortgage costs will not rise this month - a welcome relief for people already stretching their affordability limits due to increasing house prices in most areas of the country. If the central bank had raised rates in April by 25 basis points, the cash rate would have risen to 6.5%. The RBA increased the cash rate by 25 basis points three times last year - in May, August and November. The last time the cash rate sat this high was in November 1996, shortly after PM John Howard took over economic management of the economy from the Labor Party in March 1996. Rates are strongly expected to increase to 6.5% in May. Research commissioned in March by First National Real Estate found that 21% of current mortgage holders were having difficulties meeting mortgage payments, with 76% either concerned or very concerned about the prospect of future interest rate rises. Renters were also gloomy, with 40% not confident that they would ever be able to achieve home ownership, despite 70% saying that home ownership was an important future goal. A Deposit Power/REIA Home Loan Affordability Report found that Australian families needed 35.2% of their family income to pay an average home loan in the December quarter 2006. The Mortgage & Finance Association of Australia (MFAA) said homeowners should seek the help of an MFAA accredited mortgage professional to review their situation and ensure their finances can cope with future changes. Phil Naylor, MFAA CEO, said: "There are positive moves homeowners can make today to soften the blow of future rate rises. These include moving to a fixed rate home loan, paying more off your mortgage each month to create a buffer, and conducting a mortgage 'health check' to ensure you have the best deal for your situation." Graham Joyce, president of the Real Estate Institute of Australia (REIA), said: "Those seeking to get into the home market will be relieved that interest rates continue to be stable, although they should budget for possible future increases when considering taking out a home loan." The federal and state governments also came in for criticism for not doing enough to help homebuyers struggling with affordability in the face of rising interest rates. Dan Molloy, managing director of the Real Estate Institute of Queensland (REIQ), said state and federal governments needed to start thinking outside the square to find ways of helping people into their first home. He said: "Interest rate isn't the only factor influencing the country's dwindling housing affordability. It's vitally important that the treasurers at both state and federal levels address Australia's eroding housing affordability in their upcoming budgets and provide some relief for first homebuyers and low income earners." Current interest rate at 6.25% Loan amount: $300,000 Interest rate: 8% Interest-only monthly repayments: $2,000 If interest rate had increased to 6.5%... Loan amount: $300,000 Interest rate: 8.25% Interest-only monthly repayments: $2,062.50 Extra per year - $750