MORTGAGE HOLDERS MUST APPLY RESTRAINT LEADING INTO LAST QUARTER

“Don’t rely on potential rate cuts to get you through”

Resi Mortgage Corporation has urged mortgage holders to apply restraint with discretionary spending as they enter one of the most financially demanding quarters of the year.

 

Resi’s Head of Consumer Advocacy, Lisa Montgomery, says despite the latest RBA statistics indicating a slight drop in Australians’ credit card spending, mortgage holders must continue to curb spending over the next quarter and should not rely on any potential rate cuts to get them through this period.

She says: “The last round of interest rate cuts passed on by most lenders have been quickly absorbed by many credit stressed borrowers, but there are no guarantees that any further rate cuts handed down by the RBA before the end of the year will be fully passed on by lenders.”

 

Montgomery says consumers should not assume that every rate cut announced by the RBA will now automatically be delivered to them, or will be the solution to a borrower’s credit stress, given the continuing state of flux surrounding the capital markets.

 

She says: “Australians must take control of their own financial circumstances rather than relying solely on the market to fix the problem for them.”

 

“Now is the time of the year for borrowers to put the brakes on their discretionary spending – an area of spending which traditionally tends to blow out over the last few months of the year and invariably leads to a New Year hangover,” she added.

 

“The latest credit card spending statistics indicate borrowers have pulled back - whether by choice or necessity, but regardless, it’s important for everyone to continue this pattern.”

 

Montgomery says there are several key areas of spending which can easily be monitored over the last quarter and commonly create budget blowouts each year:

 

·                     ENTERTAINMENT: As the year starts to wind down there are the inevitable range of end-of-year gatherings at work and school as well as catch-ups with family and friends. Everything costs money, so it’s important to determine which ones will be kinder on your finances and prioritise them. It’s also OK to say no.

·                     GIFTS: The purchasing of gifts for both work and family can so often leave you wondering where all the money went.  Speak with the people you often exchange gifts with in advance and decide whether you now set a limit on the amount each person spends or whether you continue to exchange gifts at all.

·                     HOLIDAYS: With such a big year to wind down from, many people choose to escape for a holiday. But if they consider to have a break at home instead, without the expense of paying for accommodation, they may be surprised at how enjoyable it can be.

 

Whilst it’s easy to get swept up in all the activities involved in the winding down of a year, Montgomery says borrowers need to ensure they always have enough money to meet their regular financial obligations including their mortgage and other household utilities.

 

She says: “This year will be remembered as a tough one for many Australians, but with several months still to go, there is still opportunity to maintain some control.”

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