Lenders urged to help with cost-of-living pressures

Finder’s survey of 1,110 people in May 2023 further indicated that 43 per cent of borrowers were on the lookout for lower fees, while 37 per cent wanted their lender to offer better savings products.

Furthermore, 34 per cent of respondents said they wished their lender would refrain from lifting interest rates on home loans, 17 per cent said they wanted more support on refinancing and switching loans, and 14 per cent said they wanted access to better financial hardship terms, such as repayment holidays.

This data followed a report released by Roy Morgan that revealed that the number of Australian borrowers facing the risk of mortgage stress increased by 627,000 over the last year to May 2023.

Although the Reserve Bank of Australia (RBA) decided to hold the cash rate at 4.1 per cent in July, the compounded effect of 12 rate hikes since May 2022 has placed substantial pressure on borrowers struggling to manage mounting debt obligations.

According to the Roy Morgan research, an estimated 1.43 million mortgage holders (28.8 per cent of all mortgagors) were deemed “at risk” of mortgage stress during the three months leading up to May 2023.

Sarah Megginson, the head of editorial and money spokesperson at Finder, said millions of borrowers are feeling financially vulnerable.

“The rising cost of living has been felt by practically every Australian household and, for some, it’s more than they can bear,” Ms Megginson said.

“People often feel like banks are unapproachable or they’re stuck paying what their lender tells them, but as rising expenses burn a hole in their pockets, they’re looking to their lender to help them navigate this really expensive period.”

She further stated that lenders are coming under pressure to cut rates or offer other incentives to serve existing customers.

Indeed, three of the four major banks have recently adjusted their serviceability buffers over growing concerns for “mortgage prisoners” facing hardship as a result of having to make high repayments on standard variable rates due to their inability to refinance.

Currently, the Australian Prudential Regulation Authority (APRA) expects banks to apply a 3-percentage-point buffer on top of home loan rates when servicing mortgage customers.

[RELATED: NAB to introduce reduced buffers]