A nationally representative survey conducted by Savvy has shown that 26% of more than 1000 respondents have cited mortgage repayments as a significant cost of living concern. Extrapolated to the general adult population, this means more than 5 million Australians may be worried about keeping up with mortgage repayments in the coming months.
38% of 25-to-34 year-olds and 3-to-44 year-olds said that mortgage repayment increases are a significant concern when it comes to their ability to keep up with the cost of living. Other age groups expressed a lower level of concern about mortgage repayments.
According to the survey, 43.86% of mortgage holders spend between $251 and $500 on repayments each week, while 23% spend between $501 and $750. A further 18% claimed to pay $751 and over per week to cover their mortgage.
The survey identified 42% of respondents as having a mortgage, which would be 8.1 million Australians when extrapolated.
Mortgage stress imminent
“If that twenty-three percent who said they have mortgage repayments $500 to $750 per week were single income households, they would be in real trouble,” says Bill Tsouvalas, CEO of Savvy. “The COVID mortgage holidays are over and for some families, there may not be much left in the tank when it comes to covering mortgage repayments.”
When asked to choose their top three responses to mortgage repayment increases resulting from an interest rate rise, 53% of respondents said they would try to cut down on other expenditure to prioritise their mortgage. 28% of mortgage holders said they will absorb the increase, while 26% said they will simply grit their teeth and experience mortgage stress.
20% said they’re prepared to change lenders or refinance; 13% will lock in a fixed rate with their current lender.
“If you can refinance on a lower rate – lock it in now,” Bill says. “0.85% is still a record low, so get around to refinancing or fixing your rate as a first priority.”