My friend is preparing to enter the housing market as a first-time buyer and was startled by all the noise about the RBA's cash rate rise. It is easy to be confused when there are so many different rates making news, including the cash rate, variable rates and fixed rates. "What is the difference and which one should you pick?" she asked me.

The RBA sets an official cash rate, which is the overnight money market interest rate that banks use to determine their interest rates. Their own interest rates for mortgages and other loans can be fixed for a certain period of time, or variable which can change at any time. It is also the rate charged on overnight loans by financial institutions.

So when the RBA moves the cash rate, it is almost certain that lenders will follow suit. And from RateCity research, it is very likely that another 25-basis point rise will hit the cash rate and the home-loan market by November.

That would mean that repayments for the average home loan of $270,000 with a variable interest rate would increase by $81 a month over what the payment would have been the previous month. So should I let my friend panic and settle her nerves by assuring her that fixing will save her from the expected wave of rate rises?

Well, I'm no psychic, because if I were I would have won the lotto by now and made an early retirement spending my fortune jet-setting around the world! So I can't tell you how far rates will rise.

But I did some research and found that fixing now is like buying a Gucci purse every month and throwing it out the window — what a terrible waste that would be!

Here's a quick scenario:

• The current benchmark three-year fixed rate (which is the average of the major four banks) is 7.12 percent.
• The total repayments made in the first three years on the average $270,000 loan is $69,444.
• If the average variable interest rate rises from 5.5 percent to 7.5 percent after two years, you would be more than $4000 better off by sticking with a variable rate.

So if you are reading the latest headlines of the inevitable interest rate rises and are contemplating your next home-loan move, compare what is on offer online to your current rates. Is your lender moving your rates up further than other lenders?

It's okay to monitor the market, but if you're growing more grey hairs by the minute worrying about rate rises, settle your nerves by planning now by adding extra to your repayments. This is a sure-fire way to avoid the heat of rate rises.