Just 39% of Australians support the Reserve Bank’s decision to lift interest rates as hard and fast as it has recently, new research has found.
Meanwhile, home loan borrowers are on high alert with industry experts expecting the RBA to deliver its third consecutive cash rate increase tomorrow. Most predict the RBA will lift the official cash rate by 50 basis points on Tuesday.
A new Canstar study, which surveyed 1,001 Australian home loan borrowers and savers, found that only 39% supported the RBA’s decision to lift interests as high and as quickly as it has in recent months.
This was compared to 37% who felt interest rates should not be rising so rapidly, whilst 25% of those surveyed said they didn’t know when asked the question.
Canstar’s finance expert Steve Mickenbecker (pictured) said the struggle to balance the household budget was weighing heavily on Australians and undermining support for the rapid pace of interest rate increases.
“Home loan borrowers who are hit directly in the hip pocket by rising interest rates are naturally more opposed to the increases than the general community, with 46% of mortgage holders against rapid rate rises compared to just 24% of people who own their home outright,” Mickenbecker said.
“Conversely, many baby boomers who are likely to be living at least partially on interest earnings and struggling with inflation on a fixed income, tip to the positive side with 46% of those in their 60s supporting the fast pace and succession of rate rises.”
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Mickenbecker said regardless of whether people were in favour of rapid cash rate rises or not, many Australians were already feeling the squeeze financially.
“Canstar’s survey shows 41% either won’t or don’t know if they will be able to pay at least one of their current bills or loan repayments in full in the next six months,” he said.
“The top three ways these Australians are planning to overcome this financial shortfall are paying a partial amount of their bill or loan repayment (46%), borrowing money from family or friends (27%) or using a credit card (22%).”
Mickenbecker said if the outlook for wage rises was too far off, the increase in living expenses and loan repayments would hit a crisis level, in particular for recent borrowers.
“During the last two years, Australians knocked $8 billion off credit card debt, a large portion coming from the early release from their superannuation,” he said.
“That one-off opportunity will have been wasted for many if they have to live off their credit card now.”
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The financial comparison website has released five tips for Australians to budget balance properly this new financial year.
“Keep yourself accountable, set up an emergency fund, negotiate your repayments, consolidate any debts and automate your budget planning,” Mickenbecker said.