Almost a quarter of homeowners are worried they’ll have to sell, or have already sold, due to the rising cost of living.
According to a new Compare the Market survey, most homeowners aren’t worried about having to sell (79%), but a startling 39% of renters fear their landlord will have no other choice…. And potentially leave them homeless.*
This comes as SQM research revealed the number of residential properties sold under distressed conditions in Australia has risen to 5,252, reflecting a 2.4% increase.
Compare the Market Economic Director David Koch said this is the domino effect following the fixed rate cliff.
“Many people’s savings buffers have been depleted, and now they’re struggling to meet repayments,” Mr Koch said.
“But a forced sale is really the last resort – most homeowners will fight tooth and nail to hold onto their properties.
“We know tax cuts are coming in July, which should provide some relief. A predicted cash rate cut is hopefully underway in the second half of this year too.
“When interest rates fall, property prices are tipped to increase – so that’s something homeowners should be aware of as well.
“But borrowers need to be proactive and make sure they’re on a low rate now.
“Some people could be paying hundreds more per month extra because they’ve rolled off a low front book rate and have now rolled onto a high back book rate.
“If you’ve been with your lender for a while, there’s a strong chance you’re on a high back book rate.”
Compare the Market analysis of some of the rates available from the Big Four showed the average difference between front-book (for new borrowers) and back-book rates (for existing loyal customers) is 1.96%.
Therefore, a person with an owner-occupier $750,000 loan could be saving $1,008 a month when they switch from a rate of 8.54% to 6.58%.
| Mortgage size | The difference between variable rates in the market | ||
| Minimum monthly repayments on variable P&I rate of 6.58% | Minimum monthly repayments on variable P&I rate of 8.54% | Difference in monthly minimum repayments | |
| $500,000 | $3,187 | $3,859 | $672 |
| $600,000 | $3,824 | $4,631 | $806 |
| $750,000 | $4,780 | $5,788 | $1,008 |
| $900,000 | $5,736 | $6,946 | $1,210 |
| $1,000,000 | $6,373 | $7,718 | $1,344 |
| Monthly repayments do not include any reduction in the mortgage balance over time. These calculations assume: An owner-occupied variable interest rate of 6.58% compared to 8.54% p.a; principal and interest (P&I) repayments; the loan term is 30 years; and there are no monthly fees. | |||
“If you can’t refinance to a lower rate because you no longer meet eligibility criteria, have a crack at negotiating your own rate cut with your current lender.
“Find the lowest rate your lender offers and ask them to match it.”
Mr Koch said homeowners should be sceptical of their current interest rate and to use websites like Compare the Market to make sure it’s competitive.
Five ways to ease mortgage stress
Try to negotiate a lower rate
Just one-in-three Aussie mortgage holders have tried to negotiate a lower rate this year, according to Compare the Market research.
Amazingly, 70%of those that called their lender said they were successful in securing a discount. It shows a simple phone call could end up saving you thousands.**
Consider asking your lender for financial assistance
But if you’re still struggling to meet mortgage repayments, ask your lender for support. This could include special payment plans, fee relief, and rate concessions.
If you’re concerned, don’t try and hide and think your lender won’t notice. They want you to talk to them about what support might be available and to work together on a plan.
Switch to interest-only repayments
Switching to interest-only repayments is one way to temporarily lower your repayments. However, banks typically don’t like giving owner-occupiers interest only on home loans, but they are usually willing to work with you through the tough times.
People on interest-only loans don’t pay anything off their principal, may face higher interest rates, and face a greater risk of negative equity.
Request a longer loan term
If you’ve had your home loan for five years or more, you could ask your bank to re-amortise your loan over a new longer period.
Lenders need to weigh up a number of risks to decide if you are eligible for this. There is also a fee you usually pay to re-amortise your mortgage. The fee varies from lender to lender, ranging from $250 to $500.
While this is one way to gain immediate relief, prolonging your mortgage means you’ll pay thousands of dollars more in interest over the life of your loan. If your financial situation allows, you can switch back to a shorter loan term to save in future.
Access free financial debt counselling
The free National Debt Helpline offers advice to people struggling with bills, fines, and repayments. They can help you develop a budget, and explore different options, and advocate on your behalf to other creditors. Contact the helpline on 1800 007 007.
*Survey of 1010 people conducted in March 2024.
**Survey of 1003 people conducted in November 2022.
For more information, please contact:
Natasha Innes | 0416 705 514 | natasha.innes@
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