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New data reveals 53% of mortgage holders won’t let rate rises affect their holiday spend

October 23, 2018 Lifestyle No Comments Email Email

Despite many lenders increasing their mortgage variables rates recently, new data reveals that the majority of Aussie mortgage holders won’t cancel or downgrade their holiday plans – even if rates rise by as much as 0.5 per cent.

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A survey of an independent, nationally representative panel of 1000 Australian mortgage holders[1], commissioned by one of the world’s largest online travel insurers, InsureandGo (insureandgo.com.au), sought to uncover whether Aussies would downgrade or cancel holiday plans if interest rates increased by either 0.5 per cent or 0.25 per cent.

Regardless of the size of the rate rise, the survey reveals that most Aussies would still travel as normal. More than half (53 per cent) would travel as normal if their mortgage interest rate went up by 0.25 per cent. Just 16 per cent of all respondents would downgrade their domestic holiday to a cheaper one, 17 per cent would downgrade to a cheaper overseas holiday, and just 14 per cent would not go away on holidays at all if rates went up by 0.25 per cent.

The older the mortgage holder, the more likely they are to keep their travel plans unchanged. The survey revealed that in the case of a 0.25 per cent rate increase, 74 per cent of over-60s, 57 per cent of those in their 40s and 50s, and 38 per cent of those in their 30s would hold to their travel plans.

The results were similar in the case of a 0.5 per cent rate rise: 47 per cent of mortgagees would holiday as normal, and just 16 per cent would not holiday at all. Again, the older the respondent, the more likely they are to keep their travel plans unchanged: 73 per cent of over-60s, 50 per cent of those in their 50s, 44 per cent of 40-somethings, and 29 per cent of 30-somethings would keep their original holiday plans.

While it’s common for people to reduce unnecessary costs when household expenses increase, the data reveals that holidays matter to Aussies – with one in three (33 per cent) preferring to downgrade to a cheaper domestic or overseas holiday, than sacrificing travel completely.

Raphael Bandeira, Managing Director at InsureandGo, says: “We’d like to think that travel spend is another barometer for consumer confidence. While retail turnover figures have been stagnant – with growth of just 0.3 per cent in recent months[2] – international trips by Australians grew 7.2 per cent in the year to July 2017 and 4.2 per cent in the year to July 2018.[3] Australian domestic travel spend grew 6 per cent in the year to March 2018.[4]

“For the travel industry, it’s heartening to see how much Australians value a getaway. We still find a way to travel, even when faced with new, financially-difficult challenges. Even so, we encourage those planning holidays – particularly during Christmas – to ensure they aren’t out of pocket in the case of unexpected incidents such as lost luggage, theft or medical emergencies. With premiums that start from just $27[5], InsureandGo travel insurance can provide broad cover for multiple unforeseen incidents.”

InsureandGo reveals its top 5 reasons why Aussies should get cover, even on domestic holidays.

  1. Domestic travel disruptions occur regularly. InsureandGo data reveals that 54 per cent of domestic claims are out-of-pocket costs due to travel disruptions. If you have to cancel your travel plans due to an unforeseen circumstance, domestic travel insurance could allow you to claim back some, if not all, of the funds you have lost on flight delays, accommodation or car hire.
  2. Lost, damaged and stolen luggage are a reality in Australia. We might think that luggage-related incidents are unlikely to occur in your own country. However, InsureandGo data has revealed that 12 per cent of domestic travel insurance claims are luggage related. With the right domestic cover, your belongings can be covered in the event of delays, losses or theft.
  3. You’ll save money on rental car excess reduction. Although rental vehicle companies have insurance and offer the option to lower your excess in the case of an incident, many Aussies aren’t aware that this can be included in your domestic travel cover, and it’s more cost effective to do this. Ensure you take note of any exclusions that could result in a rejected claim, such as drink driving, using a mobile device while driving, or having someone else drive the car at the time of an accident.
  4. Recreational equipment is expensive and injuries are not uncommon. Are you skiing, snowboarding or golfing on your holiday? If your equipment were to get lost, stolen, or damaged, your out-of-pocket expense could be significant. When selecting domestic travel insurance, these activities may not be a standard inclusion in your policy and often need to be added as a policy extra.
  5. Business travellers take expensive assets with them. Business travel insurance offers an additional level of coverage, in the event that equipment, such as laptops, get lost or damaged. It’s a low-cost additional option that can save you the stress and allows you to claim business equipment hire and courier expenses.

If mortgage interest rates went up by 0.5%, would you cancel or downgrade any holiday you had in mind for yourself or your family? % respondents
I would holiday as normal 47%
I would go on a cheaper overseas holiday 19%
I would go on a cheaper domestic holiday 18%
I wouldn’t go on a holiday 16%

If mortgage interest rates went up by 0.25%, would you cancel or downgrade any holiday you had in mind for yourself or your family? % respondents
I would holiday as normal 53%
I would go on a cheaper overseas holiday 17%
I would go on a cheaper domestic holiday 16%
I wouldn’t go on a holiday 14%

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