Hungover by home loans: 1 in 3 face mortgage debt overload
Alarm bells are ringing for Aussie homeowners who say they took on too much debt, according to new research by Finder.
Â
A Finder survey of 1,013 respondents – 331 of whom have a mortgage – revealed 1 in 3 (33%) think they borrowed too much on their home loan. That's up from 21% last year.
Â
That's equivalent to more than 1 million homeowners who say they bit off more than they could chew.
Â
Richard Whitten, home loans expert at Finder, said many borrowers are grappling with the debt they've taken on.
Â
"Households are desperately trying to cut expenses or boost their income to avoid financial strain, but this financial safety net won't last forever.
Â
"The good news is that interest rates could drop in the next couple of months – which would be a huge relief for those who overextended themselves."
Â
Finder's research shows the younger generations are more likely to be in over their heads.
Â
Almost half (46%) of gen Z say they stretched themselves thin, followed by millennials (37%). That's compared to 26% of gen X and 20% of baby boomers.
Â
Whitten encouraged those who are struggling to get in touch with their lender as soon as possible.
Â
"Take a fresh look at your situation and think about the best ways to alleviate mortgage stress.
Â
"Refinancing is a great way to lower your interest rate and reduce your monthly repayments, saving you money over the length of your loan.
Â
"Lenders may also be able to offer you interest-only payments for a temporary period or extend the mortgage term to lower monthly payments.
Â
"This will cost you more interest in the long run, but can offer much needed relief in the short term."
Â
Whitten said using the Finder Score is an excellent way to compare which home loan is right for you.
Â
"If your home loan doesn't start with a Finder Score of 8 or 9, then you could be getting a better deal elsewhere.
Â
"Our expert team has evaluated various products in our database, rating products with a score out of ten, with higher scores indicating better value."
Â
Finder's research found 1 in 5 (20%) are now struggling with repayments as a result of borrowing more than they could afford.
Â
A further 15% admitted they paid too much for what the house was worth and subsequently had to take out a larger loan to cover the costs.
Â
| Do you think you borrowed too much on your home loan? | |
|---|---|
| Yes, I am struggling with repayments | 20% |
| Yes, I paid too much for what the house was worth | 15% |
| No | 67% |
| Source: Finder survey of 331 mortgage holders, September 2024 |
Â
Methodology
- Finder's Consumer Sentiment Tracker is a monthly recurring nationally representative survey of more than 60,000 respondents.
- Figures in this release are based on 1,013 respondents, 331 of whom have a mortgage, from September 2024.
- The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics.
- The survey has been running monthly since May 2019.
Â
Sources
Â
Here's some tips for dealing with mortgage stress.
Ask a question