The interest rate rise announced yesterday will no doubt strike fear into the hearts of borrowers throughout Australia. For those who borrowed at the height of the real estate boom in Sydney the news is dire.

Interest already makes up a substantial portion of your mortgage repayments, and any rise will increase the overall burden. This is exacerbated by the likelihood of a continued levelling of property values, meaning many owners are unlikely to be able to recoup any losses through resale of their properties.

Australian Property Monitors general manager Louis Christopher said that price reductions of 10 percent in Sydney and five percent in Melbourne and Brisbane were likely. The median house price in Sydney at present according to APM is $523,000, The Sydney Morning Herald reported.

It is obvious to many that the steep price rises that peaked in May 2003 were unsustainable. Wages did not keep pace with these increases and borrowers found themselves facing mortgage repayments that took up a record proportion of their salaries.

The consequent lifestyle implications, as well as massive debt resting on the shoulders of a whole generation, were major factors in bringing the property boom to an end. I

t is arguable that this was a good thing, ending the monopolisation of the market by a wealthy few who invested at the right time or inherited property. However, this is no consolation to those who now find themselves eye-deep in debt.

Some borrowers have pre-empted the interest rate rise and opted to change over to fixed rate mortgages, but there are other ways of reducing the impact of these rate rises on your life.

On yourmortgage.com.au, Luke Scheales, national sales manager for Mortgage House, recommends consolidating as many loans as possible, especially personal loans that are likely to have a higher interest rate.

He suggests trying to pay off as many debts as you can now to reduce the load later, especially credit card accounts. If you can, try to pay a bit extra on your mortgage repayments and make sure that you’ve got loans with a redraw facility so that you can put in any extra funds later on.

If you’re struggling to make payments now, Scheales says, then you should look at fixing [your loan].

If all of this is leaving you feeling somewhat cheated by Sydney’s fickle property market, take heart. At least in the long run, property is one of the safest investments you can make.

Eventually the tide will turn and you can rest assured knowing that, if you’re in it for the long haul and can weather the interest rate rises, your property is a strong investment in your future.

And for those who are waiting for an opening to enter the market this may be a great time for you to make your move.

© Star Observer 2018 | For the latest in lesbian, gay, bisexual, trans* and intersex (LGBTI) news in Australia, be sure to visit starobserver.com.au daily. You can also read our latest magazines or Join us on our Facebook page and Twitter feed.