Higher petrol prices, higher interest rates – managing your debt is now more important than ever

There is only so far a dollar can stretch and recently, with Russia’s invasion of Ukraine, flow on effects could make it harder for you to afford everything you need each week.

Russia’s attacks on Ukraine have seen the global oil price shoot up to levels not seen in years, with grain and other commodity prices also surging.

Russia supplies about 30 per cent of Europe’s gas and oil imports and accounts for around 11 per cent of world oil production. Although Australia imports the majority of its refined fuel from Asia, the hit to the oil supply in Europe will still be felt here.

Analysts say the impact will be felt in different ways in Australia, as the market disruptions ripple through supply chains.

There are estimates average petrol prices could hit $2.10 a litre. 

According to online aggregator FuelPrice Australia, the average price for 98 Octane currently sits at $2.02 a litre in Sydney, $2.19 in Melbourne, $2.13 in Canberra, and $1.99 in Brisbane.

For Unleaded 91, the average price is currently $1.97 a litre in Hobart, $1.95 in Melbourne, $1.80 in Sydney and $1.78 in Brisbane.

In relation to interest rates, Russia’s invasion of Ukraine makes an early interest rate rise in 2022 more likely, with even a small increase raising borrowing costs by $45 a month.

In February, Australia’s median property price stood at $728,034, CoreLogic data showed.

With a 20 per cent deposit, a borrower owing $582,427 pays $2,269 every month to the bank on a 2.39 per cent variable loan rate.

The Commonwealth Bank, Australia’s biggest home lender, forecasts a rate rise in June for the first time since November 2010.

Even a small rate rise of 0.15 percentage points, taking the cash rate to 0.25 per cent, would see borrowers with a typical loan pay another $45 a month on their mortgage repayments.

With the war in Russia, its now more important than ever to get your debts under control. Reducing debt will put more money in your pocket each week so that you can create a funds to deal with life’s uncertainties.

We did not expect a war after COVID-19 but here we are and taking hold of your financial situation will put the power back into your hands to manage your finances the best you can.

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