An increasing number of homeowners are downsizing to a smaller property in a bid to reduce their debt, new research has found.
According to the latest statistics from Loan Market Group, homeowners choosing to downsize are creating a comfort zone for themselves.
Loan Market chief operating officer Dean Rushton said the majority of downsizers are of retirement age but many don’t have the capital to sustain their current lifestyle so they need to reduce debt by selling up and moving to a smaller property.
“We have had a recent case from one of our brokers who had retiree clients on Sydney’s North Shore who have sold their home for $900,000 and bought another place for $650,000,” he said.
“This type of downsizing, particularly from clients on bigger properties, is now commonplace all around the country.”
Mr Rushton said empty nesters were also downsizing to help their children get into the real estate market.
“These clients may sell the long standing family home and buy a smaller property, which gives them money to start preparing for retirement and also some spare cash if they want to assist their children in buying their first property,” he said.
“The Reserve Bank of Australia (RBA) lifting official interest rates six times between October last year and May this year from 3.0 per cent to 4.5 per cent has certainly had an impact on older mortgage holders.”
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