As another rate rise hits Australian borrowers, savvy homeowners are urged to use this opportunity to shop for a better deal.

Phil Naylor, CEO of MFAA said rising interest rates is a reminder to mortgage holders to shop around.

"Changes to the official interest rate can present significant opportunities for consumers who have not already looked into refinancing options," said Naylor. "Consumers should remember that what was the most suitable mortgage 12 months ago isn't necessarily the most suitable mortgage now."

Even before the expected rate hike by the RBA on Tuesday, a couple of lenders have broken ranks and slashed their mortgage rates. CUA, Australia's largest credit union reduced its standard variable rate by 0.25% while AMP said it will slash interest rates on its introductory loan by 0.45% and further cut its basic variable mortgage rate by 0.22%.

Meanwhile, all the major banks have all chosen to follow the RBA's lead and added 0.25% on their variable rate loans effective 9th April.

"We are seeing increasing competition in the lender market with smaller banks and credit unions making a strong comeback," said Naylor.