Families Are on Pins and Needles, Waiting to See How Interest Rates Will Climb

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Many individuals are on tenterhooks as they wait to find out how high rates will climb when the Reserve Bank of Australia meets next Tuesday.

While some economists are tipping a rate rise of as much as 0.25 percentage points, others believe the RBA will hold off for now.

Either way, the decision will likely significantly impact families across the country. For those with mortgages, even a slight rate increase could add hundreds of dollars to their monthly repayments.

And with many already struggling to make ends meet, any further rise could push them over the edge. Savings rates are also likely to increase if the RBA raises rates, which would eat into the meagre returns that savers are currently getting.

So whatever the RBA decides next week, it will have a significant impact on Australians’ hip pockets.

Nicola Alexander and her husband Bryan are both waiting to see what happens next. The Perth couple work weekends to pay their bills and feed their three children, aged eight to fourteen.

“We don’t have any luxury items,” Ms Alexander said.

“Every cent we earn goes towards the mortgage, groceries and school fees.”

The Alexanders say they’ve cut back on their spending as much as possible, but any further increase in rates would be difficult to handle.

“I think it would just about tip us over the edge,” Ms Alexander said. “We’d have to consider whether we could afford to keep our house.”

CBM Mortgages director Craig McDonald said that, if current predictions hold true, the cash rate could increase to as high as 3.50 per cent over the next six months- a significant jump from its current 1.85 per cent rate.

“That would take a typical variable rate mortgage from around 4.3 % to around 6.8%,” Mr McDonald said.

For the Alexanders, that would see their monthly repayments jump from $2,800 to more than $4,000.

So whatever the RBA decides next week, it will have a significant impact on Australians’ wallets. Even a slight rate increase could mean financial hardship for families like the Alexanders. Let’s hope the RBA considers that when they meet next Tuesday.

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