Rates reprieve for home-buyers
FIRST-HOME buyers Shazz Gillett and Sarah Collins sighed with relief yesterday.
With their first mortgage payment due this week, they were expecting to be hit with their first rate rise after only living in their South Lismore home for a mere two weeks.
However, despite widespread predictions of a 25 basis point rate rise, the Reserve Bank of Australia shocked the nation yesterday when it left interest rates unchanged.
“It’s fantastic news,” a clearly ecstatic Ms Gillett said.
“Everybody is struggling financially at the moment.”
Ms Gillett and Ms Collins purchased the $230,000 four-bedroom home with a 5 per cent deposit after scouring the market for more than a year.
“It was a hard year. Every time they put up interest rates we had to go back to the bank and re-budget to make sure we could do it,” Ms Gillett said.
She said the pair, who work for low-paying community service organisations, could only afford to purchase the home because of the boost to the home-buyers grant and historically low interest rates.
“We didn’t want to be paying rent and wanted the options that home ownership gives,” Ms Gillett said. “There are a lot of costs involved in buying a home and an interest rate rise on top of that would have made it very hard.”
Over the last year, 541 first-home owners across the Northern Rivers have taken advantage of the government grants and low rates.
But many are now finding it tough with the RBA raising rates a total of 75 basis points at its three previous meetings.
CommSec chief economist Craig James said the odds were now high the RBA would raise rates next month.
Ms Gillett said the pair would start putting money aside from this week to provide them with a buffer.
“We will re-budget and perhaps look at living expenditures,” she said.
“But in the long run it’s cheaper to own your own home than it is to rent.”
Reserve Bank Governor Glenn Stevens said banks had generally raised rates more than the cash rate in recent months and most mortgage rates had risen by close to one percentage point.
“Since information about the early impact of those changes is still limited, the board judged it appropriate to hold a steady setting of monetary policy for the time being,” he said.