Every time interest rates rise, the impact reverberates directly through Barbara Aldridge's second-hand bookshop.
"Everyone goes 'huh', clutches their money and I'm one of the last places they spend money, so everyone sort of takes a breath," Ms Aldridge said.
As a keen observer of people's spending habits over 27 years behind the counter of her business in the Perth suburb of Guilford, she has noticed people are most likely to keep money in their pocket when there are interest rates rises, elections and wars.
She expects it to be no different if the Reserve Bank of Australia lifts rates again, as widely expected, when it meets on Tuesday.
Concern for young mortgage holders
While she can mostly absorb the impact of rate increases on her business loan, she is worried about younger people with large home loans.
"If it's going up again it's going to be the younger ones," she said
"A lot of the older people have already budgeted over the years, they're used to budgeting."
The current cash rate is 0.85 per cent, and while it is coming off a historic low there is concern at how high it could go.
A survey of over 900 West Australians by the Chamber of Commerce and Industry found when the cash rate reaches one per cent, 38 per cent of mortgage holders start cutting back on discretionary spending.
By the time the cash rate reaches two per cent, 66 per cent of mortgage holders are cutting back, and at three per cent, it's almost 80 per cent of mortgage holders.
According to the survey, the first things people cut back on are cafes and restaurants, then their savings and investments, followed by recreation and holidays and then consumer goods, like electronics, cosmetics and clothing, and finally food.
Cutting out luxuries
Deanna Benedetto and her husband switched the loan on their Ellenbrook home, in Perth's north, from a fixed interest rate to a variable rate just as rates started to rise.
She said the higher repayments were starting to bite.
"Luxuries and things like that we're having to cut back on," she said.
"Tightening our purse strings, I guess, even more. It's a struggle."
Anglicare WA's Celia Dufall is general manager of the Financial Counselling Network, a group of 14 organisations that work together to reduce the impact of financial hardship.
"People are really struggling out there," Ms Duffal said.
"The latest rate rises has been on the back of some really significant increases in costs of living. And, so, we're seeing more and more people reaching out for help."
Financial counselling push
There was a 25 per cent increase in calls to the emergency food relief service between April and May, as rising inflation also hit people's budgets.
"It's not just low-income households, it's households that are leveraged and high have high leverage," Ms Duffal said.
"There's nothing left in their budget. Before COVID, we were seeing a high degree of mortgage stress across WA with negative equity. We are seeing signs that we are possibly moving into that environment again.
"If people are feeling stressed, what they can do and what we'd encourage them to do is to reach out to their local financial counsellor who can then support them in identifying ways that they can they can move forward."
2021 census data released during the week showed on average mortgage repayments represented a smaller share of household incomes than in the 2016 census.
In 2016, 19.9 per cent of mortgaged households in WA had mortgage repayments higher than 30 per cent of their household income.
By 2021 that had dropped to 13 per cent in WA, and 14.5 per cent at the national level.
Rent increases tipped
Purely Real Estate owner Yadi Gibson, who is based in Perth's northern suburbs, said those statistics were reflective of her client base.
"They're actually in positions where, if interest rates go up, they'll be fine," Ms Gibson said.
"They've got incomes that will sustain the increases.
"But I'm sure there'll be others there that have maxed out at the interest rates they've been paying, or they've bought at, and it's going to be difficult.
She predicted life would become harder for renters as investors reacted to ongoing rate rises.
"Investors are going to make further rent increases, because they've got to pay the mortgage," Ms Gibson said.
