Image of house balancing out money
Most Australians are spending half of their household income on mortgage repayments. Image: Canva.
  • Interest rate uncertainty is driving signficiant levels of worry among mortgagees.
  • One in four borrowers said mortgage repayments more than doubled over the past year.
  • Over one in three were well beyond the threshold for mortgage stress.

It’s said a person’s home is their castle, but it has become a prison for some, with mortgage repayments as the warden.

Every interest rate increase pushes borrowers’ worry up further, with insights from the MUM CFOs platform finding mortgage anxiety is high.

It was found that around 80% of borrowers were concerned that they may not be able to meet their mortgage payments if the interest rates continue to rise.

Over the last year, 24% of borrowers stated that their repayments had risen by more than 50%.

The amount being spent on mortgage repayments is well beyond the typical 30% threshold for mortgage stress, with the figures from the platform finding 36% of borrowers indicating that more than 51% of the total household income was spent on mortgage repayments, while 22.9% of borrowers are spending between 41% and 50% of their total household income on mortgage repayments.

While the Reserve Bank of Australia (RBA) put rates on hold this month, last month’s rate rise tipped some over the edge.

“The June cash rate increase was the straw that broke the confidence, and financial security, levels of many borrowers,”

Louisa Sanghera, Mum CFOs and Zippy Financial Director and Principal Broker

Poor pandemic decisions have now caught some buyers short. Sanghera said some borrowers over-extended themselves when taking out a loan.

“Some borrowers who may have been overzealous with their lending during the pandemic are now very worried whether they will be able to continue to service their mortgages if rates continue to rise, with some making poor financial choices because of their increasing financial stress,” said Sanghera.

In a bid to get a foot through the door of their own home, some borrowers resorted to pulling the wool over lenders eyes; a decision which some are likely to regret.

“Unfortunately, when property markets are booming and there is an element of FOMO amongst buyers, sometimes this can lead to people purposefully underreporting their household expenses so they can qualify for higher loans to purchase a new home,” said Sanghera

“The fallout of this mindset is that people may wind up borrowing more funds than they can realistically service when interest rates return to more normal historical levels.”

Louisa Sanghera, Mum CFOs and Zippy Financial Director and Principal Broker



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