The decision by the Reserve Bank to leave the official cash rate on hold at 4.35% in early December arrived like a perfectly timed Christmas gift whether you’re planning on purchasing your first home or upgrading to a larger one.

However, it's imperative to note that while this news may bolster your property aspirations, Craig Betalli, Senior Broker from Our Broker advises that lenders will continue to maintain a meticulous eye on spending habits this Christmas, ensuring that borrowers have the means to shoulder the responsibilities of loan repayments.

To this end, the recent findings from Finder paint a concerning picture: millions of Australians are anticipated to fall into debt during the Christmas season, potentially requiring months to settle their financial obligations. According to the research, approximately 4.2 million individuals—equivalent to a substantial portion of the population—will resort to various forms of credit to finance their festive celebrations, ultimately accumulating debts that may prove challenging to repay. Alarmingly, more than 1 in 10 people (11%) intend to rely on credit cards to cover their holiday expenses predominantly.

The study highlights that 7% of financially strained shoppers are turning to buy-now-pay-later (BNPL) services to facilitate their holiday spending spree, while 3% plan to secure a personal loan for the same purpose.

While this intention to spend is undoubtedly music to retailers' ears, those saving for a first or next home loan mustn’t let the Christmas cheer derail their property goals.

Manage your plastic card expenditures wisely

If you are planning on applying for a home loan in 2024, it’s crucial to maintain control over your credit card spending. High levels of unsecured debt, such as maxed-out credit cards or extended payment arrangements such as personal loans, signal poor financial habits to a lender. 

Though it may seem outdated in today’s era of ‘buy now, pay later,’ physically handling cash and having a fixed amount of the folding stuff in your wallet can help minimise excess spending. Moreover, try using debit cards only as a backup scenario - and only if you keep limited funds in the attached savings or transaction account. Furthermore, these funds should be based on the amount you have budgeted to spend over the silly season. 

Without a Christmas budget, there’s a higher risk of facing a ‘Christmas hangover’ in January when credit card statements start piling up. Overspending during the festive season can disrupt savings plans, loan repayments, or aspirations of buying a new or next home. Accumulating excessive debt also sets a challenging tone for the new year, potentially affecting long-term property objectives.

Steer clear of impulsive buying

To prevent frantic last-minute shopping, plan ahead and create a gift list for those you wish to buy for. Despite the joyful tunes of Wham, Bing Crosby and Mariah Carey filling shopping centres with festive cheer, your loved ones won’t be cheering come January if you strain your finances by overdoing the Christmas gift giving.

Once you have a final list of friends and family, jump online and start searching the net to check prices before shopping to ensure you get a good deal. Some retailers may even price match the competition. Impulse buys are the enemy of good budgeting. However, if you enjoy Christmas shopping and go over budget a little, adjust your spending somewhere else.

Craig Betalli says, “Budgeting might not top the summer bucket list activities such as surfing, dining or holidays, but it will make sure your new year is free from financial stress.

“Then again, tackling Christmas shopping without a budget is akin to free-falling without a parachute – it’s a risky move that could quickly derail your real estate plans for 2024.”

For more tips on budgeting for a first or next home, contact Our Broker at 1800 913 677.