Budgeting For Interest Rate Rises

MRR and PLR Articles Pack

Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.

AI Generated Image

Budgeting for Rising Interest Rates


Overview

On April 4th, the Reserve Bank of Australia (RBA) opted to keep the official cash rate steady at 6.25%. This decision spared homeowners from the anticipated 0.25% hike in variable mortgage rates. However, many analysts predict that a rate increase will likely occur in May, pending the release of March's official inflation figures.

The Impact of Rising Rates

According to a survey by NEWS.com.au and CoreData, rising rates are putting significant financial pressure on Australians. Nearly one in three Australians would be compelled to sell their homes if interest rates increased by 1%. Moreover, 44% of property investors stated they would have to sell if rates rose by that margin due to unsustainable mortgage costs.

Loan Example

Consider a $400,000 loan with a 7.99% interest rate over 25 years:
- Current weekly repayment: $711
- Total interest over 25 years: $524,642

With a 0.25% Rise:

- Weekly repayment: $727
- Total interest: $544,588 (an additional $19,946)
- Extra annual cost: $812

With a 0.50% Rise:

- Weekly repayment: $742
- Total interest: $564,706 (an additional $40,064)
- Extra annual cost: $1,616

With a 1.00% Rise:

- Weekly repayment: $773
- Total interest: $605,445 (an additional $80,803)
- Extra annual cost: $3,246

Financial Strain

The Sunday Herald Sun reported on April 8th that many families are resorting to using credit cards to pay their mortgages, leading to massive debt. Some families have amassed $160,000 in credit card debt, and financial counselors warn that many are just one rate hike away from losing their homes.

Importance of Budgeting

In light of potential interest rate increases, managing your finances is crucial. Allocating more to mortgage repayments might require cutting back on other expenses to avoid accruing high-interest credit card debt, often around 20% annually.

Regular budgeting is essential. It helps you grasp where your money goes and allows for better financial planning.

Budgeting Solutions

If budgeting feels overwhelming or you're unsure where to start, websites like www.easy-budgeting.com offer practical solutions. They provide a user-friendly 12-month budget model in Microsoft Excel, accessible to everyone.

Features of the Budgeting Tool:

- Easy to use: Complete your budget in three simple steps.
- Customizable: Input start month, frequency, and amount for automatic 12-month data generation.
- Comprehensive analysis: Review expense graphs and summaries for clarity on spending patterns and potential savings.

By regularly updating your budget, you'll gain control over your spending, better prepare for interest rate increases, and ensure your money works harder for you and your family.

For more details, visit [www.easy-budgeting.com](http://www.easy-budgeting.com).

You can find the original non-AI version of this article here: Budgeting For Interest Rate Rises.

You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.

“MRR and PLR Article Pack Is Ready For You To Have Your Very Own Article Selling Business. All articles in this pack come with MRR (Master Resale Rights) and PLR (Private Label Rights). Learn more about this pack of over 100 000 MRR and PLR articles.”