Rate rises squeeze seniors still carrying mortgage debt

Homesafe Wealth Release said inquiries around earlier rate increases this year were, on average, 25 per cent higher than in the corresponding months of 2025.

Paying off a mortgage was the main motivation for 80 per cent of people inquiring this year, compared with 60 per cent last year, a 20-percentage-point increase.

The figures suggest debt elimination is becoming a more pressing priority for older Australians rather than accessing housing wealth to supplement retirement spending.

Retirement plans collide with higher repayments

Homesafe CEO and managing director Dianne Shepherd said many older home owners had mapped out retirement when interest rates were at record lows, leaving limited room to absorb higher repayments through additional earnings.

“If you are 62 with a mortgage, it may not be possible to work another 10 years to cover a bigger repayment. Your income is what it is, and every rate rise comes out of what you live on,” Shepherd said.

“The homeowners who call us are not after another loan. They want to pay off what they owe and stay in the home they have spent most of their lives paying for. For most older Australians, the home is their biggest asset.”

Homesafe Wealth Release is a home-reversion arrangement that exchanges an upfront lump sum for an agreed share of a property’s future sale proceeds.

Typically aimed at home owners aged 60 and over, it operates in eligible Sydney and Melbourne postcodes and selected regional areas, subject to age, property and other requirements.

The pressure comes against a longer-term increase in mortgage debt approaching retirement.

A recent Senate submission from Your Financial Wellness estimated that 243,000 Australians aged between 60 and 65 had a mortgage.

Separately, Australian Bureau of Statistics figures showed 54 per cent of home owners aged 55–64 were still paying off a mortgage in 2019–20, compared with fewer than 20 per cent in 1996.

Research from the Australian Housing and Urban Research Institute (AHURI) identified mortgage repayments as older mortgagors’ largest budget item, accounting for about one-third of expenditure.

“Older mortgagors seem prepared to run down their superannuation to bolster wealth stored in home equity when repayment risks are present,” the AHURI report said.

AHURI has warned that using superannuation to repay housing debt rather than support retirement spending could increase pressure on the age pension system.

However, a sizeable cohort of older borrowers still retain options to reduce their borrowing costs.

Equifax figures showed switching to another lender increased 3.2 per cent year on year among borrowers aged 56–60 in September, while activity among those over 60 rose 2.3 per cent.

Equifax Australia executive general manager Moses Samaha said stronger equity positions and smaller outstanding debts could give older borrowers scope to secure relief.

“Older homeowners with higher equity and lower loan balances retain the flexibility to negotiate or refinance, mitigating some of the pressure from successive rate hikes,” Samaha said.

Meanwhile, the Commonwealth Bank of Australia (CBA) on Monday (9 November) assessed the direct impact of higher rates as slightly smaller than during pre-pandemic tightening cycles because interest-sensitive assets, predominantly deposits, had grown considerably.

It added that many mortgagors did not reset their mortgage payments in 2025 when rates were lowered, which it said would reduce the impact of higher rates.

“Strong balance sheets in aggregate will also allow many households to support their spending more than previously even if their incomes deteriorate,” CBA said.

[Related: ‘Ticking up’: APRA reveals arrears rising as pressures mount]