Imagine how many newspapers would sell if the headline was “Everything well in the world today, prosperous times for years to come”
Not many I would guess.
Two headlines that grabbed my attention in the past few weeks.
“Household debt to double by 2024”
and
“Five interest rate rises predicted this year”
Here’s my two minute take on these headlines.
When you read the first headline you might think “how are we going to afford that”. In fact it’s government debt doubling per household. So it’s not something you pay out of your own pocket, so relax. Governments have spent a truckload of cash during Covid so logically debt has increased. That’s not to say that rising petrol prices and inflation may result in more conservative household spending being required. Tightening of our belts, so to speak.
The second headline is taking the most negative economic prediction. In fact the average across most economists is 3 rate rises of 0.25 % (25 basis points) per annum this calendar year. Considering the cash rate has been at 0.1% for 19 months, it follows that rates have to rise eventually.
The simple message is to read up on the facts behind the headlines.
What’s important to know is that millions of Australian borrowers have actually made extra payments on their loans during Covid and now have extra cash in their redraw and offset accounts that they can draw on.
Also most property owners have substantial equity in property that they may choose to create what we like to call a “fighting fund”
At Onyx we help you to crunch the numbers and develop a long term plan to ensure you are stress free during rising inflation and interest rates.
Call any time 1300 1400 15