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Brokerage research highlights financial pressures among mortgagors

by Adrian Suljanovic10 minute read

Data from the major brokerage has revealed the extent of the cost-of-living crunch on mortgage holders.

Research commissioned by major brokerage Aussie Home Loans (Aussie) has said that 52.5 per cent of home owners are spending over 50 per cent of their income on mortgage repayments.

The survey took responses from 1,000 mortgage holders between the ages of 21 and 60 and was conducted online during April 2024.

The research has highlighted the level of mortgage stress among borrowers, with 16.3 per cent indicating that they are struggling to meet repayment obligations due to the increase in interest rates.

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While the outlook for interest rate movements remains uncertain, the survey has said that 25.4 per cent of respondents are still holding out for the cash rate cuts before they opt to refinance their home loan.

Indeed, during the press conference following the May monetary policy meeting, Reserve Bank of Australia (RBA) governor Michele Bullock said that the RBA had discussed the possibility of a rate hike but “on balance the board felt that ... staying where they are was appropriate”.

Additionally, 40.2 per cent of respondents said they’ve taken to working longer hours or overtime, with 22.5 per cent taking on a secondary job to increase their budget to cover elevated mortgage payments.

Furthermore, the research said that over 21 per cent of home owners are waiting for interest rates to drop before upgrading or updating their dwellings, while 19 per cent are waiting on a rate decrease before looking to renovate.

Commenting on the survey’s findings, Lendi co-founder and Aussie chief operating officer Sebastian Watkins said the data reflects the concerning financial stress faced by home owners as “a knock-on effect from the interest rate increases”.

The cash rate is at its highest point in over a decade and the data said that households are significantly burdened by the increase in their mortgage repayments.

“This is forcing many Australians to alter their lifestyles dramatically, and despite this over a quarter of home owners are postponing refinancing in hopes of future interest rate reductions,” Watkins said.

“We don’t know when the next interest rate drop will be, so in this uncertain environment Aussie is committed to implementing supportive measures and developing innovative solutions to help our home owners manage these difficult economic times effectively.”

Watkins further emphasised the role mortgage brokers play in this process and has encouraged home owners facing financial hurdles to reach out and explore the options available.

He said: “In this higher rate market, borrowers need to be actively pursuing all avenues to alleviate their mortgage stress right now – and not waiting on a potential drop in rates.

“ABS data showed the national average interest rate for home owners is currently 6.8 per cent with an average mortgage size of $624,000.

“However, many lenders are offering rates from 5.99 to 6.4 per cent, meaning an average home owner with a $624,000 loan who refinanced right now, could save around $300 every month.

“These are significant savings which could make a key difference to the financial situation of many Australians, with new lender options available on the market to assist with this.”

[RELATED: Rate hike considered but not yet appropriate: RBA board]

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