What FNQ can expect as interest rates increase according to Cairns financial adviser Dave Haydon

Interest rates have increased another 0.5 per cent following the Treasurer’s warning to Aussies on the rising cost of living, but what does it mean for Far Northerners? FIND OUT HERE

FINANCE gurus have warned Far North families to brace for a sharp pain in the hip pocket as a forecast rise in living costs coupled with a steep interest rate hike of 0.5 per cent threaten to create a budget nightmare for regional Australians.

Following the Reserve Bank of Australia’s decision on Tuesday to lift interest rates and Treasurer Jim Chalmers’ warning on the cost of living, a Cairns financial adviser has given his views, predictions and tips to survive the rates hike.

Senior financial Adviser at Kelly Wealth Services Cairns Dave Haydon said the increase in interest rates is going to have both a positive and negative effect, depending on your current situation.

Kelly Wealth Services senior financial Adviser Dave Haydon says the interest rate rise is going to have a positive and negative effect. Picture: Brendan Radke

“For the average Cairns family with a mortgage on variable rates and monthly repayments, it is likely their payments are going to increase by $120 per month,” he said.

“The effect on mortgages when rates rise usually comes through fairly quickly from the banks, so this is an immediate effect people need to adjust for in their budget.

“With Tuesday’s announcement on the rates rising, it was also indicated we can expect even further increases in the coming months, so Cairns families can expect mortgage payments to stay up there too.”

Mr Haydon said the Far North is feeling the effects already with elevated oil prices and the cost of everyday food items increasing.

“The typical cost of fruit and vegetables and bread – our everyday staples – have risen by 4 to 5 per cent compared to last year,” he said.

“The best thing the region can do to prepare for these new rates is be aware of your money, make sure you have a good budget in place to take control of your money.

“Talk to your bans and consider fixing your mortgage rates to provide certainty and protect from further rate increases.”

But Mr Haydon did concede there was a positive side to take advantage of for Aussies with a surplus for spending.

“On the flip side, when interest rates rise, the stock market falls – and it did fall 1.6 per cent today, causing a dip in value for superannuation funds but also meaning stocks are now cheaper,” he said.

Federal Treasurer Jim Chalmers has spoken of a “full blown cost of living crisis”.

“Also, over the next 6 to 12 months these interest rates rising should have a moderating effect on the value of property prices as people begin to borrow less.”

Treasurer Jim Chalmers said families need to “brace for the reality” of a “full blown cost of living crisis” as inflation would likely “get worse before it gets better”.

RBA governor Philip Lowe said “inflation in Australia has increased significantly”, and that “the board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead”.

Originally published as What FNQ can expect as interest rates increase according to Cairns financial adviser Dave Haydon