Rate Hikes: Don’t Lose Your Nerve

Last week we got the news of another interest rate hike – with interest rates now at 3.10 per cent. Word around town is that this has made some prospective homeowners nervous, with people deciding not to go through with commitments to buy. While on the one hand this is understandable, it is very important to look to the future and not be unduly put off by concerns of immediate affordability, especially before you challenge your discretionary spending.

It is a sad fact that the price of houses continues to climb. Never in living Australian experience have housing prices fallen. This means that the price your desired home is going for is likely to be at its best. You can afford your home if you take measures like these:

• While showrooms are replete with the latest designer furniture and fittings, you actually don’t need these accoutrements to own a new home. Get second hand furniture from relatives and second-hand shops.
• Think you need an expensive holiday every year? Think again. There are National Parks across the breadth and width of this country that invite adventure and new experiences. Camping is a great activity for families, and you don’t need to buy new equipment to do it. Ask around – you are sure to find friends and colleagues that would only be too happy to lend their equipment.
• Want to own the latest Smartphone? Think again. What is wrong with hanging onto your current phone? If your Smartphone is damaged, buy a cheaper version.
• Once you buy your house, pay your mortgage and then some. Even an extra $20 per fortnight is going to mean that you will own your home outright sooner.
• If your work has a salary sacrifice option, look into it. By salary-sacrificing for the future, you are reducing your taxable income, which will bring both immediate and longer lasting benefits.

Economising measures can mean that you can go ahead and purchase a new home: it’s time to hold your nerve.

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• Finance