Interest rate rise pushing WA families to the limit
06 February 2008
There is more pain now for many WA mortgage holders with the Reserve Bank of Australia raising the official interest rate by 0.25 per cent yesterday to counter surging inflation, taking interest rates to a 12 year high. The rise is set to add $50 dollars a month to the average home loan of $300,000.
A recent survey carried out by RAC Mortgage Find found that 38 per cent of mortgage holders in WA admitted they had already cut back on spending following a series of rate rises.
But one in 10 of the mortgage holders surveyed said their spending would be significantly impacted or they would be forced to think much more carefully about their spending if there was a rate rise in February.
With these recent rate rises expected to push more home owners closer to breaking point, mortgage holders could benefit from considering their options according to Mortgage Find's Ron Critchley.
"There's no doubt some mortgage holders are feeling the pain, but there are financial options available to people who are finding it difficult to cope with their current financial situation."
Consolidate
For mortgage holders who are also struggling with other repayments on credit cards, store cards and personal loans, debt consolidation can offer short term relief by reducing repayments in the short term. However, consumers may end up paying more in the long run.
Review your options
Given the outlook for further interest rate rises, a home loan review could save mortgage holders thousands of dollars.
Take a fix
A fixed rate home loan can offer a ‘set and forget' option for home owners who are struggling with increasing interest rates. This option is often popular during periods of rate movement, but a fixed rate can limit flexibility.
Review Other Expenses
For some home owners it may be as simple as reviewing unnecessary expenditure and trying to curb costs in other areas.