Mortgage holders warned to be smart with spending as interest rates held

Changes to interest rates will likely have a bigger impact on Bunbury than other areas of Australia given the higher proportion of Bunbury dwellings owned with a mortgage. Last week the Reserve Bank of Australia decided to leave interest rates at 4.35 per cent in its first meeting of the year. It cited easing inflation as to why the rate remained unchanged but noted inflation “remains high”. The rate is still the highest it has been in more than a decade. REIWA president Joe White said the average West Australian mortgage repayment had risen from $2076 per month to $3115. “That’s an increase of 50 per cent or basically $1,039 a month,” he said. “That is a lot of money and wage rises haven’t kept up with that but as house prices have been rising then that loan amount has been increasing. “Not only are they paying more on what they’re borrowing, but they’re borrowing more so they’re being bitten twice.” Almost 38 per cent of dwellings in Bunbury are owned with a mortgage compared to 35 per cent of Australia as a whole. Homes owned outright are 5 per cent higher in Bunbury than Western Australia and 3.5 per cent higher than Australia. According to census data, monthly mortgage repayments in Bunbury are lower than the national average. Bunbury has a greater proportion of repayment rates less than $2000 a month, with 67 per cent of Bunbury dwellings owned with a mortgage paying under the amount compared to 50.9 per cent for Australia as a whole. Mr White said there was uncertainty as to what the next rates move may be. “The narrative at the moment is that the interest rates are stable or likely to reduce a touch, however I have been reading an equal narrative that says they might rise, so the jury for me is very, very much out on that one,” he said. The hold comes after 13 rate rises which have put increased pressure on households while everyday costs have risen. Mr White said households should think hard about how they’re spending money. “World wars are won and lost on increments and mortgage repayments, whether it’s on a household income, is much the same,” he said. “If you’ve got interest rate rises that are hurting the budget, you work on the increments and you go through your spending. “The flip side of that coin is when interest rates drop, my advice is always never ever lose an opportunity to work on your balance sheet. “If you can keep your repayments the same and make extra repayments, that will have a massive impact on the length of your loan and also give you some insurance that if down the track you do hit some unexpected expenses, you’ve probably got some equity that you can draw on if you need to in an emergency.”