Rate rise strikes at families
By Charles Wood
INTEREST rates have gone up again and money for many families on the Northern Rivers is expected to get even tighter. But it's been revealed we're already going through our worst cash crisis for the past two decades.
Steve Snelgrove, the senior counsellor with the Lismore and District Financial Counselling Service, said that even before the latest interest rate rise was announced, he'd been overwhelmed by the number of calls for help.
It's a joint Federal and State Governments funded service which deals with issues surrounding debt, bankruptcy and court action over debt.
"The squeeze is now coming from both sides, not only with mortgage increases but also with rentals," Steve said.
He said there was now a three to four week wait for face-to-face interviews and it was not just young families. "We're seeing a growing demand in the older age range of 45 onwards," he said.
The Reserve Bank yesterday lifted the cash rate 0.25 per cent, and banks and other lenders are expected to pass that hike on to home owners. In most cases they'll now be paying 8.3 per cent, the highest since the late 1990s.
Summerland Credit Union manages about 4000 home loans and advises those who are struggling to first approach their respective financial institutions.
"Unfortunately people wait until it's too late. It's better to contact your financial institution sooner than later and discuss your options," Summerland CEO Margot Sweeny said. She claimed many people felt embarrassed and were putting some of their financial burden on to credit cards.
Summerland's credit analyst Kim Morris agreed.
"We do not encourage people to over-extend. From the start we structure their home loans so they take a short term rather than the maximum, so it gives them a buffer to absorb interest rate increases."
As for the choice between going for fixed or variable rates, Ms Morris provides clients with historical information on the way interest rates have fluctuated in the past. "We then leave it to borrowers to make an informed decision," she said.
Some families were choosing to split their loans between variable and fixed but even so, one wage often was not enough to make ends meet. Donna Wicks recently moved from Perth with her husband and 14-month-old baby.
"I don't have a choice. I have to work," she said. According to her everything is getting out of control.