A REPRESENTATIVE survey of 1000 Australians by the Savvy group on interest rate rises and its impact on mortgages has shown that 21per cent of Australian mortgage holders are “feeling the pressure” of rate hikes, yet have not missed a mortgage repayment.
Australian families have been battling nine consecutive Reserve Bank of Australia (RBA) official cash rate rises since May 2022.
This has brought the record low 0.1%p.a. rate to 3.35%p.a. Rate rises are a response to rampant inflation, which stands at 7.8%.
Despite this, 2% of respondents said that they have missed repayments on their mortgage, with 1% saying they have missed many repayments and are worried about losing their homes to the bank.
Sadly, two respondents of the 1000 said they had already had the bank foreclose on their mortgage.
More than 21% say they own their home outright; 22% say they are renting and are not as concerned about rate rises as much as their homeowner counterparts.
COMBATTING RATE RISES
With mortgage repayments tipped to increase further, 38% of Australians have indicated they will spend less and prioritise the mortgage to make ends meet.
This is up from 27% from polling in August 2022.
Some 62% of 35–44-yearolds indicated this was their method of funding rate rise increases.
19% said they would try to increase their income, up 4.5% from last year (14.5%). Around 13% said they would rely on savings (2022: 14.4%); 5% said they would pay the difference with money in offset accounts (2022: 6.75%); and 10% said they would try and lock in a fixed interest rate (2022: 12%).
Only around1.7% said they would try to downsize their home.
Savvy spokesperson, Adrian Edlington said that people are willing to tighten belts and go without to prioritise the mortgage, which is exactly what the RBA wants to see but is a harsh reality for families doing it tough.
“If rates continue to rise, scrimping and saving to fund the mortgage has an end point. With reports saying that consumer confidence has hit another near historic low last month, we can only hope that
three percent cohort who are missing repayments doesn’t increase as time goes on.” he said.