Rates Pain

Investors who have a relationship with a planner aligned to a financial institution are twice as likely to be feeling financial pain due to interest rate rises according to the latest CoreData Investor Sentiment Index.

The first quarterly report of 2008 reveals that while 14.4% of all respondents state the six interest rate rises since May 2006 (excluding the seventh last week) have made property loan repayments more difficult, this figure (27.9%) is double for those who use an institutionally aligned financial planner.

There may be a variety of reasons for this seemingly paradox situation – one being those who went to see a financial planner may be more active as investors, perhaps holding investment properties and being more geared than the average investor.

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The sample size for the index was a representative sample of 1,150 individuals – 89 of these had a relationship with an institutionally aligned planner.

Other specific segments that reported deviance from the mean when it came to the pain being felt by the bevvie of interest rates rises over the past 18 months were:

- Respondents living in Victoria (19.6%).

- People who have both home loans and investment loans (18.1%).

- Those aged 40-49 (17.6%).

- Those with diploma or certificate qualifications (incl trade) (19.2%).

Meanwhile, 17% of respondents indicated generalised stress or anxiety about the increased interest rates and worry about the future.

Beyond that 14% indicated they now have less disposable income or less money for luxury items.

5.5% responded they have less money available for savings.

3.7% have less money available for eating out or entertaining.

2.6% are looking at higher paying jobs or a second job, or going back to work.

2.6% are spending less on groceries or essentials.

Some respondents are spending less time with their kids due to working more, while others are delaying life plans like upgrading their house, renovating or starting a family.