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Can’t keep up: 1 in 8 homeowners behind on loan repayments

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Mortgage stress is escalating as the Reserve Bank of Australia continues to lift the cash rate, according to new research by Finder.

A Finder survey of 1,054 respondents – 313 of which have a mortgage – revealed 1 in 8 (13%) have missed a mortgage repayment in the past 6 months.

The research shows 7% of mortgage holders have missed 1 home loan repayment in the past 6 months while a worrying 6% of homeowners have missed more than 1 repayment.

That's the equivalent of 429,000 mortgagors who have missed a repayment since July.

A small proportion of mortgage holders (2%) have asked their lender for a repayment holiday or have applied for hardship.

Richard Whitten, home loans expert at Finder, said the level of mortgage stress in Australia was worrying.

"Nine consecutive rate hikes from the RBA means an Australian with the average loan size of around $600,000 will be paying roughly $1,000 more per month compared to what they were paying in April last year.

"Households are really struggling with the monthly outlay and some just can't keep up."

The leading cause of missing a repayment was rising interest rates (37%) while 1 in 3 (33%) simply forgot to pay on time.

Of the Aussies who missed a repayment in the past 6 months, 1 in 4 (26%) admit it was because they had run out of money after paying other bills.

If costs rise any further, 1 in 7 (15%) homeowners said they think they will miss a repayment in the next 6 months.

Whitten said mortgage rates were creeping up too quickly for many Australians.

"With mortgage rates shooting over 5% in 2023, Aussies who had been diligently servicing their monthly repayments are finding it harder to do so.

"With further rate hikes predicted, things could be about to get worse."

Whitten said there are steps homeowners can take to reduce mortgage stress.

"Try to negotiate a more competitive interest rate with your current lender.

"If you think your lender can't give you a good enough deal then find something better and switch. Refinancing your home loan takes a few hours' work but the savings are well worth it.

"If you know you're going to miss a payment, talk to your lender first. It's better to negotiate some kind of hardship arrangement or a repayment holiday than to simply stop repaying the loan. This harms your credit score and puts you at risk of a default."

Have you missed a mortgage repayment in the past 6 months?
No and I'm not worried about it58%
No, I haven't but I am worried about it27%
Yes, I've missed 1 repayment7%
Yes, I've missed more than 1 repayment6%
I've asked for a repayment holiday/applied for hardship2%
Source: Finder survey of 313 Australian mortgage holders, January 2023
Why did you miss the repayment?
Interest rates increased and I could no longer afford it37%
I forgot about the repayment33%
I ran out of money because of other bills26%
Other4%
Source: Finder survey of 313 Australian mortgage holders, January 2023
Why did you miss the repayment?
Interest rates increased and I could no longer afford it37%
I forgot about the repayment33%
I ran out of money because of other bills26%
Other4%
Source: Finder survey of 313 Australian mortgage holders, January 2023

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