Brutal reality of buying your first home as rates increase

Fiona Morris finally achieved her lifelong goal of owning a home three weeks ago.

Her repayments are about to increase for the second time.

The Reserve Bank of Australia (RBA) lifted the official cash rate by 0.50 per cent on Tuesday afternoon in an effort to respond to soaring inflation.

A small-business owner and single mother, Ms Morris, 43, purchased her first home in Newcastle’s outer suburbs for $410,000 this year.

“I had kids really young, so this is my first time,” she told NCA NewsWire.

“It was a lifelong dream of mine to own my own home.”

Purchasing a home in the current market and under unstable economic conditions, Ms Morris was under no illusions that she would be at the mercy of rate rises.

“We knew it was coming, so I made sure that I didn’t go in at the top end, but it’s something that you need to think about,” she said.

Treasurer Jim Chalmers warned that inflation would “get worse before it gets better” and even more rate hikes were expected before the end of the year.

“That’s the brutal reality, unfortunately,” he told Sky News on Tuesday.

“I’m waiting like everybody else for these announcements and wondering what the impact on my budget is going to be.”

Ms Morris has only made two repayments on her mortgage and already the weekly figure has jumped by 8.5 per cent. Tuesday’s rate rise is set to force it up even further.

“I’ve literally been paying my mortgage for three weeks and the initial application was $340, it went up to $380 and now I’m expecting it to probably wind up over $400,” she said.

Rate Rise Calculator “I’m really blessed that I have purchased within my means, but there are a lot of families that have been impacted by job lay-offs, or changing living circumstances, and even just the increase of the cost of living.

“So with all these other factors, it puts them into a pretty desperate place.”

Ms Morris is no stranger to adapting to changing financial circumstances.

She founded her own small business, Start My Cleaning Biz, three years ago to guide women through the process of starting up their own business to bring new streams of income into the home.

“There’s lots of options for increasing your lines of income … getting a hobby, a second job, selling off all your unwanted stuff,” she said.

“I’ve got friends and family who are looking down the barrel either having to rent out rooms in their home or having to sell their home.”

Ms Morris’ 20-year-old son was forced to move back home, as rising rental prices made it impossible for him to start saving or his own first home.

“I’m not at the end of the line yet, but I can see how people are,” she said.

“There’s definitely adjustments in the budget that are being made.

“I think it’s time while I’m comfortable to maybe consider making some extra payments.”