Around 1.3 million Australians are under financial pressure due to their mortgages
Australian mortgage holders are increasingly feeling the strain of rising home loan costs, according to recent research by comparison website Finder, a leading comparison website.
The Finder survey, which included 1,062 respondents, found that 40% of mortgagors are paying more than 30% of their income towards their home loans. This percentage is the widely accepted benchmark for mortgage stress.
The findings suggest that approximately 1.3 million Australians are under significant financial pressure due to their mortgage commitments.
The survey also revealed that nearly 23% of respondents are contributing more than half of their income to home loan repayments, highlighting the severe financial burden on some households.
Graham Cooke (pictured above), head of consumer research at Finder, noted that rising interest rates have significantly impacted household budgets.
“Mortgage holders are facing the highest home loan costs in decades, with four in ten being in mortgage stress,” he said. “For many households, mortgage payments have skyrocketed far beyond their initial expectations, following the 13 interest rate hikes that began in 2022. Many households are paying far more on their mortgages than expected due to repeated rate hikes.”
Cooke pointed out that there is growing optimism that interest rates might decrease soon, as several major banks have recently reduced their fixed rate offerings. However, he cautioned that fixing a home loan purely to save money could backfire if variable rates drop substantially in the near future.
To alleviate financial stress, Cooke advised homeowners to reduce unnecessary expenses and focus on building an emergency fund.
“Small savings can add up significantly, making a big difference at the end of the month,” he said. “If possible, cut down on all discretionary spending such as takeaway and divert those savings to an emergency fund.”
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