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Selling scared: Half a million homeowners stressed they might have to sell

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Distressed property sales could be on the rise, according to new research by Finder.

A Finder survey of 1,073 respondents – 627 of whom are homeowners – revealed 1 in 7 (15%) are worried they might have to sell their home due to the rising cost of living.

That's equivalent to 515,000 households who are financially stretched to the limit.

The research found younger homeowners (gen Z and gen Y – 27%) are three times more stressed than older mortgage holders (gen X and baby boomers – 9%) about the prospect of needing to sell their home.

Richard Whitten, home loans expert at Finder, said the research is alarming.

"Borrowers are experiencing a huge financial shock after a relentless climb in interest rates over the past year and homeowners weren't coping.

"Many had locked in ultra low interest rates for a couple of years – so some people are paying 3 or 4 more percentage points on the mortgage overnight.

"Many just can't find potentially thousands of dollars more each month to service their home loans."

More than a third (35%) of Australia's 9.8 million homes are owned with a mortgage, according to the Australian Institute of Health and Welfare.

The latest lending indicators from the Australian Bureau of Statistics show the average mortgage size (for owner-occupier dwellings) was $580k in June 2023.

Thousands of fixed-rate mortgages have started expiring, meaning repayments have jumped by thousands of dollars a month.

Finder's Consumer Sentiment Tracker found that 2 in 5 (39%) of homeowners struggled to pay their mortgage in August 2023 – up from just 1 in 4 (26%) 12 months prior.

Whitten said borrowers are very nervous about future rate hikes.

"Many borrowers have already pulled back on all non-essential spending as they have no money left to contribute to their mortgage.

"They feel like they've got little choice but to sell up or lose their home."

Whitten urged borrowers to find out what hardship allowance they qualified for while they considered their options.

"Be upfront with your lender about your struggles before you start missing repayments.

"Your lender may be able to help you, with options like a repayment pause, a temporary reduction in your repayments, or financial counselling," Whitten said.

Are you worried you might have to sell your home due to the rising cost of living?
I haven't thought about it18%
Source: Finder survey of 627 Australian homeowners, August 2023

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