Many Aussies’ home buying decisions have come back to haunt them in the wake of the Reserve Bank’s reluctance to offer homeowners mortgage relief in recent months.
A national poll has revealed nearly a third of Aussie homeowners now believe they paid too much for their homes and regret how much they borrowed.
The amount of homeowners expressing regret was a 21 per cent jump from when comparison group Finder.com.au ran the same survey last year.
The total number of homeowners feeling regret about their purchase could be now as high as one million, Finder noted.
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Home purchases spiked during the Covid pandemic. Picture: Julian Andrews
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It is estimated more than half the remorseful property owners would have purchased their homes in the past five years, including during the Covid-era housing boom between 2020 and 2022.
Homeowners frequently cited repayments they could no longer afford as the main reason for their regret, according to the nationally representative poll of mortgage holders.
Others claimed they overpaid for their homes to start with and had to borrow too much as a result.
It comes as economists revealed December would probably be the earliest the Reserve Bank could reasonably announce a cut, but a cut early next year remained more likely.
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Many home seekers felt pressured to offer higher prices. Picture: Richard Dobson
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Finder home loans expert Richard Whitten said a large number of borrowers were grappling with the excessive debt they’ve taken on.
“Many households are desperately trying to cut expenses or boost their income to avoid financial strain, but this financial safety net will not last indefinitely,” he said.
Mortgage broker Rebecca Jarrett Dalton of Two Red Shoes said it was doubtful homeowners regretted their purchases altogether but some would likely feel they didn’t pay off more debt when rates were lower.
“The prices they paid would have served their purpose at the time,” she said. “But there could be some homeowners who wished they paid more of their mortgages off during Covid.”
Mortgage broker Rebecca Jarrett Dalton said homeowners would likely be regretting not paying more of their loans off before rate rises. Picture: Dylan Robinson
Finder revealed that younger generations were more likely to say they overextended themselves – often in an attempt to get into the market before prices rose even further.
This motivation would have been hardest felt during mid-2020 to early 2022 when record low interest rates sparked the country’s fastest lift in home prices since the 1950s.
Almost half (46 per cent) of Gen Z respondents said they stretched themselves thin, followed by Gen Y (37 per cent). This compared to 26 per cent of Gen X and 20 per cent of baby boomers.
Mr Whitten said there could be a silver lining on the horizon. “The good news is that interest rates are forecast to drop in the next couple of months so some relief is hopefully on its way for households who overextended themselves.”
Mr Whitten urged borrowers to reach out to their lenders if they are facing financial hardship.
Many Aussies bought when interest rates were at record lows.
“Now is the time to re-evaluate your situation and explore options to alleviate mortgage stress.
“Refinancing is a great way to lower your interest rate and reduce your monthly repayments, saving you money over the length of your loan.
“Lenders may also be able to offer borrowers interest-only payments for a temporary period or extend the mortgage term to lower monthly payments.
“This will cost borrowers more interest in the long run, but can offer serious relief in the short term.”
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