Interest rate predictions stressful
ON TOP of studying full-time, Karan Prakash worked up to 50 hours a week to save for a deposit on his first home.
The Upper Hutt 23-year-old worked at the movies while studying for his Bachelor of Communications, fitting in lectures by working late into the night – sometimes doing stocktakes until 2am.
‘‘It was incredibly difficult, but I had to make it work because I was renting at the time,’’ he says. ‘‘In the end it was worth it, because I managed to save quite a bit of money.’’
When he graduated and landed a job as an enrolment adviser at the New Zealand Correspondence School, his savings allowed him to purchase his Upper Hutt home a year ago.
‘‘I’m a single guy so it was unusual at the time for me to buy a house, but I figured I’d rather pay my own mortgage than someone else’s. It was a logical step for me,’’ he says.
Prakash managed to get his loan at 5.4 per cent but worries about predictions of 7 per cent interest rates this year.
‘‘It will become a bit harder if the interest rates on my mortgage were to go up to 7 per cent. I might have to tighten the belt a little when it does rise,’’ he says.
Almost a third of those surveyed in the latest Fairfax Media-Ipsos poll believed they would struggle to manage payments, and 5 per cent said there was ‘‘no way’’ they could afford it. Two-thirds believe they can find the extra money needed.
Of those without a mortgage, almost 12 per cent said the hike means they could no longer afford their own home. A further 9 per cent said they would struggle to buy one.
But Prakash says his job is ‘‘comfortable’’, and the salary is enough to allow him to pay off his mortgage at a reasonable rate.
So far he has received two pay rises based on performance evaluations, and thinks these will probably continue annually.
‘‘It’s not huge amounts, but it’s enough to make it worthwhile,’’ he says.
He also has three flatmates who pay rent, helping offset his repayments. His parents have also helped out.
Prakash considers himself one of lucky ones, and says he is ‘‘ not worried’’ about the future. the too