Life isn’t getting any easier for mortgage holders, with more than two-thirds struggling to make their repayments, according to a new survey.
According to Finder, 35 per cent of mortgage holders are battling to meet their repayments – the equivalent of 1.1 million households.
The percentage of those struggling to pay is down from a record high of 41 per cent in June last year, but up from 24 per cent in January 2022.
Home loans expert at Finder, Richard Whitten, said many homeowners were struggling to stay on top of their finances.
“Millions of Aussie borrowers are experiencing financial stress due to the fact that their monthly mortgage repayments have blown out so rapidly,” Mr Whitten said.
“The start of the year is a great time to assess where you might be able to save.
“Your home loan is the best place to start, as it’s likely your biggest expense.”
Mr Whitten said Aussie mortgage holders facing higher costs are stretching their mortgage term in order to bring down monthly repayments.
According to Finder, 18 per cent of refinancers extended the length of their home loan when they refinanced.
The average refinancer added 3.5 years back onto their loan when they switched banks.
Mr Whitten said in the current climate it was better to refinance sooner rather than later.
“A common reason customers look to refinance is to reduce their repayments, often by extending their loan term back to 30 years,” he said.
“Mortgage holders are looking to free up some spare cash, but it could be a much more expensive option long-term.”
Mr Whitten said homeowners needed to tread carefully when refinancing.
“Review your existing home loan to make sure you’re not paying more than you need to – and pay attention to what your lender is offering new customers,” he said.
“Try to negotiate it down with your current lender, but also remember to look at what rates other lenders offer because you may find a better deal.
“There’s still plenty of competition in the market.
He said you can try to stick to your original loan’s term if you do decide to refinance, so it doesn’t reset the clock.
“Or you can start a new 30-year term but focus on keeping your repayments higher than the required monthly repayment,” he said.
“Your aim should be to pay off the new home loan faster either with extra repayments or better yet by building up your offset account.”