The record increase in interest rates is starting to weigh on borrowers, with new research finding 40 per cent of mortgage holders struggled to pay their home loan in May.
According to Finder, this is the highest proportion recorded since Finder began tracking the question in 2019 and is the equivalent of 1.32 million households.
The percentage of those struggling to pay is up from 24 per cent – or 792,000 households – 12 months ago.
The research found mortgage stress is most common among women, with 47 per cent struggling to pay their home loan in May, compared to 32 per cent of men.
While millennial homeowners are the hardest hit with nearly half (49 per cent) admitting they are having trouble making their mortgage repayments, compared to 33 per cent of Gen X.
Head of Consumer Research at Finder, Graham Cooke said panic was starting to set in for many Australians.
“With 11 interest rate rises over the past 12 months, and potentially another one or two on the horizon – millions of mortgagees are at the end of their tether,” Mr Cooke said.
“Many are facing the frightening prospect of defaulting on their loans and potentially losing their homes.
“Two in five mortgage holders struggling is the highest figure we’ve seen in four years of asking, and more rate rises seem likely.”
This findings come as 44 per cent of experts from Finder’s RBA Cash Rate Survey forecast another increase to the cash rate in June.
The odds of the RBA hiking the official cash rate have jumped in the past week after the Fair Work Commission said it would lift the minimum wage by at least 5.75 per cent.
According to economists at Jarden, Nomura, Credit Suisse and Macroeconomic Advisory there are now three more increases ahead, which will take the cash rate from the current 3.85 per cent to 4.6 per cent before the end of the year.
Money markets are also pricing in a 60 per cent chance the RBA will hike the cash rate this week, while they have also moved to price in an almost 100 per cent chance the Reserve Bank will lift the cash rate to 4.1 per cent by July.
There is also a 40 per cent chance the RBA will raise rates twice by August to 4.35 per cent.
The market-implied terminal rate has also increased to 4.18 per cent, which has been forecast for September.
Mr Cooke said if you’re struggling to make your home loan repayments, talk to your lender before you risk missing a payment.
“If you haven’t already, try to negotiate a lower rate with your lender. If you don’t get it, it might be time to refinance somewhere else,” he said.