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1 in 4 mortgage holders ‘extremely concerned’ about rate rise, new research finds

On the back of yesterday’s OECD recommendation that the Australian Reserve Bank increase interest rates next year, new research from Australian Credit Bureau, Experian, has revealed that a quarter of Australian mortgage holders are extremely concerned about the impact a potential 1.5% interest rate increase would have on their ability to service their loan.

The RFi study of over 1,500 Australians commissioned by Experian, found younger mortgage holders were far more worried about a rate hike, with 26% of Millennials (18-34yo) and 26% of Gen X (35-55yo) saying they were ‘extremely concerned’ about their ‘ongoing ability to make mortgage repayments’ if interest rates increased by 1.5% – compared to just 10% of Baby Boomers.

Suzanne Steele, Managing Director of Experian Australia/NZ, which operates credit bureaus in 19 countries, said the results are particularly concerning for younger generations who were most likely first home buyers, that were the most in debt generation and also the most likely to miss repayments and feel financially stressed.

Key research findings:

  • On average, Millennials with a mortgage, credit card or personal loan are $428,000 in debt, owing $146,000 more to credit providers than the average GenX and Baby Boomer
  • Average mortgage debt: Millennials $390,000, GenX $328,000 and Baby Boomers $189,000
  • Average credit card debt: Millennials $12,700 GenX $8,100 Baby Boomers $4,300
  • Average personal loan debt: Millennials $26,000, GenX $20,000 Baby Boomers $15,000
  • 22 per cent of Australian Millennials had been unable to make a mortgage repayment in the last 12 months, which is twice as many as the overall market average (11%)
  • Millennials have applied for more than twice as many credit cards, mortgages and personal loans as the average GenX or Baby Boomer in the last 12 months and were also the most likely to be declined in their credit applications
  • 55 per cent of Millennial mortgage holders had reduced spending on “essential items”, 38 per cent had worked additional hours or a second job and 33 per cent had borrowed from friends or family to ensure they could service their debts and commitments

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