Debt problems are becoming a growing issue for Aussie households amid the Reserve Bank’s delayed action on interest rate cuts and home buyers overextending themselves during the pandemic.
Nearly half the country’s homeowners now report struggling to pay their monthly mortgage bills – a record high, according to a new survey by comparison group Finder.com.au.
One in five homeowners said they had missed at least one repayment on their loan or asked for reprieve from their bank over the last year.
The 47 per cent of households who said they’re in mortgage stress in October was well up on the 35 per cent who made the same claim in January.
This level of mortgage stress – those spending an unsustainable amount of their income on repayments – was well up on the 31 per cent of homeowners who said they were struggling in October 2022.
MORE: Shock landlord payslips bust big housing myth
Reserve Bank governor Michele Bullock had yet to announce a cash rate cut. Picture: John Appleyard
MORE: ‘Costs more’: big real estate lie exposed
Experts said more mortgage holders were doing it tough because they had burned through their savings and emergency funds in the two years since the RBA first hiked rates in May 2022.
Finder.com.au has been running monthly mortgage stress surveys since early 2019. It found that the average mortgagor forked out $2,682 on their monthly repayment in October.
Finder head of consumer research Graham Cooke said arrears could grow unless rates were cut by December.
“Australian homeowners have slashed non-essential expenses but for many it’s still not enough,” he said.
MORE: Turnbull’s private $150m home revealed
US Federal Reserve Bank Chair Jerome Powell recently announced a cut in US rates, which triggered cuts in many other countries – but not Australia.
MORE: Rents fall across two thirds of Sydney
“Millions of Aussies will face financial uncertainty this festive season with many already under serious financial pressure.
“Aussies are more stressed about putting a roof over their head and food on the table than ever before.”
Mr Cooke urged homeowners to have a ‘frugal Christmas’.
“Try to negotiate a more competitive interest rate with your current lender to give yourself a little more breathing room before the end of the year. If they don’t budge – tell them they’re dreaming and refinance.”
Stretched household finances have led to a growing sense of guilt from families when they spend more on a none essentials, additional research showed.
MORE: Extreme steps buyers are taking to get homes
The average household is spending close to $2700 a month on repayments.
MORE: Bold moves that got Albo $8.8m property empire
Half of Aussies (51 per cent) polled by Finder.com.au said eating out and clothing purchases triggered a feeling of guilt, while about a quarter felt guilty about outlaying for drinks at pubs or bars or beauty products.
Sarah Megginson, personal finance expert, said the pressure to be frugal was ever-present thanks to the cost of living crisis.
“Many households are struggling to make ends meet so any kind of impulsive spending can trigger regret,” she said.
“It’s very common for consumers to feel guilty spending money and this feeling is usually the result of a lack of planning.”
English (US) · 