It’s no secret that the Reserve Bank of Australia (RBA) has closely monitored the housing market this year. And until the recent bout of rate rises, it has been more than eleven years since the RBA lifted interest rates. Subsequently, it’s been a long time without any worries about how rate rises will impact the household budget for many homeowners. But with Christmas just weeks away, impending rate rises are a concern to many sellers, buyers and homeowners. So, here are three key things you can do to ensure interest rate rises don’t impact your ability to enjoy Christmas and New Year.
Review your expenses and make cuts where necessary
Now is the time to sit down and thoroughly assess where your hard-earned money is going each month. Are there any areas where you can cut back to free up some extra cash? For example, this could be as simple as eating out less often or switching to a cheaper broadband plan. Every little bit counts.
Make a budget and stick to it
Once you’ve reviewed your expenses, it’s time to create a realistic budget. Doing so will help you stay on track financially during the festive season and avoid overspending. Be sure to include all of your regular costs, such as mortgage repayments, utility bills, and groceries, as well as any one-off costs, such as Christmas gifts and holiday travel.
Invest in a fixed-rate home loan
If you’re worried about interest rates rising, then now might be the time to consider fixing your home loan rate. Fixing rates will give you certainty about your repayments for a set period which can be helpful in budgeting for other costs. Just be sure to weigh the pros and cons before making a decision – speak to your mortgage broker, financial planner or bank for more information.
What interest rises mean for borrowers
If you’re considering buying a home during the festive season, you may be concerned about the impact rate rises will have on your finances. But don’t let that stop you from taking action to get yourself into the property market. Here are some key things to keep in mind:
It’s a great time to lock in a low rate if you’re still renting
With interest rates rising, it can be an excellent time to leap into homeownership if you’re still renting. By securing a fixed-rate mortgage now, you’ll know your exact repayment amounts for the duration of your loan, making it easier to budget and plan.
Considering selling soon? Rate rises may impact your selling price
If you’re thinking of selling your home sometime in the next year, rate rises may impact the price at which you can sell. Consequently, working with a real estate agent who knows your local market and can help you make the best decision for your situation is essential.
Consider re-mortgaging to a longer-term if rate rises are likely to impact your finances
If you’re concerned about rate rises seriously impacting your household budget, it may be worth re-mortgaging to a longer term. The immediate benefit is reducing the size of your monthly repayments, which will give you more financial breathing room until rates start to ease again. Just be sure to do your research first and speak to your mortgage broker or bank for advice before making any big decisions.
In conclusion, whatever steps you take to prepare for rate rises this Christmas, it’s important to remember that you always have options. While rate rises may seem daunting, you can protect your household finances this Christmas with smart planning and budgeting.
Whether trimming your expenses or switching to a fixed-rate loan, these simple strategies will help you prepare for rate increases and enjoy the festive season without added stress. So take a moment to sit down and map out your budget, and start preparing today. Then, all that’s left to do is enjoy the festive season.