Rate grinch wouldn’t spoil Christmas plans

According to new research from travel insurance firm InsureandGo, which involved a survey of 1,000 Australians nationwide, 53 per cent of mortgage holders would proceed as planned with their holidays even if interest rates rose by 25 basis points.

Conversely, InsureandGo reported that 16 per cent of all respondents would downgrade their domestic holiday to a cheaper one if rates increase by 25 basis points, 17 per cent would downgrade to a cheaper overseas holiday, and 14 per cent would not go away on holidays at all.

According to the research, the older the mortgage holder, the more likely they are to keep their travel plans unchanged, with the survey revealing that in the case of a 25-basis-point rate increase, 74 per cent of mortgage holders in their 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.

Moreover, the research found that if rates were to be increased by 50 basis points, 47 per cent of mortgage holders would go on holiday as normal, and 16 per cent would not go on holiday at all, with older Australians still more likely to proceed with their holiday plans. Seventy-three per cent of over 60s, 50 per cent of those in their 50s, 44 per cent of over 40s, and 29 per cent of those in their 30s would keep their original holiday plans.

Additionally, the data also revealed that one in three (33 per cent) of respondents prefers to downgrade to a cheaper domestic or overseas holiday than sacrificing travel completely.

Reflecting on the research, Raphael Bandeira, managing director at InsureandGo, said: “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 – 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. Australian domestic travel spend grew 6 per cent in the year to March 2018.”

Mr Bandeira added: “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.”

[Related: Mortgage serviceability pressures easing]