Mortgage anxiety looming for Aussie homeowners

Australian homeowners are hurtling towards mortgage anxiety, with new research revealing more than 75 per cent of people were unsure how cash rate increases would impact their household budget.

The data, from financial services group Aussie, shows 28 per cent of Australian mortgage holders did not consider the cash rate would increase at all when they budgeted for their home loan.

A further 38 per cent only budgeted for the impact of a cash rate of 3 per cent or less.

State Broking Manager at Aussie, Karen Sorrenti, said it was a stressful time for many mortgage holders with the cost of living rising across many areas.

“Our latest research shows almost one in five Australians (18 per cent) with mortgages are dealing with ‘significant mortgage stress’, and a further four in five (81 per cent) confirmed the rising cash rate and upward cost of living is a growing reality, placing unwanted tension on their household,” she said.

“However, a staggering number of mortgage holders have not taken action or investigated their alternative options, which is one key factor in addressing the mental and emotional strain.”

The research also revealed two-thirds of Australian mortgage holders said they are worried they may default on their loan repayments as a result of the increased cash rate, with almost one-third definitely or highly concerned.

Just 14 per cent of mortgage holders had revisited their home loans as soon as the first cash rate rise occurred in May.

“Over recent years, more Australians have understood the role that mortgage brokers play in helping navigate the home finance market, enabling them to secure finance that best suits their individual needs,” Ms Sorrenti said.

Seven savvy ways to avoid mortgage stress:

  • Stop, look and ask; always know what your current rate is, and if it’s fixed, ensure you know when it ends. 
  • If you’ve avoided financial literacy, now is the time – it’s the gateway to managing – or better avoiding – financial distress. 
  • Do some calculations – be one step ahead on what you can afford for repayments and what amount would put you on the path to financial strain. 
  • Practice a mindful money approach, paying attention to your full financial position. 
  • Refinance to a home loan with low or zero fees. 
  • Take advantage of refinance cashback offers. 
  • Consider an offset account to reduce the amount you pay in home loan interest.

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.