Out With The Peugeot, In With A Little Pedal Power

The Peugeot will have to go; so will the glossy magazines and the regular dinner parties.

Despite having created a substantial buffer on their home loan, Rachel McIntyre said she and her husband, Mark, would tighten their belts after yesterday's 0.25 percentage point interest rate rise to 5 per cent.

The couple, both 33 and with two babies, upgraded from a two-bedroom Dulwich Hill apartment to a three-bedroom house in Petersham, which they bought in March for $620,000.

At $3000 a month, they pay more than double the $1401 minimum repayment on their fixed loan with the Commonwealth Bank and do not want to see that buffer diminished by further interest rate rises.

``Because we're paying the extra we are not that bothered, because we have taken that into account," said Ms McIntyre.

``But it's not going to be as yawning as it is presently."

Ms McIntyre quit her job in 2001 as a personal assistant to be a stay-at-home mother for Callum, 20 months, and now Ruby, six weeks, while her husband works as an accountant for a telecommunications company.

``I think we've been lucky and we haven't had a huge problem with interest rates or paying it back so far," she said.

``It might be a bit more of a shock later on." However, she would rather cut down on luxuries than repay the mortgage more slowly. ``We quite like our glass of wine in the evening perhaps that will be nipped a bit more. We entertain a lot. We frequently cook and have people over so we might have to share the opportunity around for other people now.

``I like to buy a lot of cooking magazines so I probably wouldn't buy as many, plus clothes and shoes. All of the frivolous things in our lives would definitely be checked and double-checked before they're undertaken."

She said that they have a Honda CRV four-wheel-drive, and will sell their Peugeot and her husband will ride his bicycle to work in St Leonards, which he often does to keep fit. ``He might start doing that again to save on a bit of petrol."