Rattled by rising rates: 165,000 homeowners may be forced to sell
Almost a million homeowners could be forced to take drastic action if interest rates remain elevated until next year, according to new research by Finder.
A Finder survey of 1,012 respondents – 292 of whom have a mortgage – revealed 27% (equivalent to 891,000 households) are not prepared for interest rates to remain high until 2025.
Â
The research found 5% of homeowners – equivalent to 165,000 households – would have to sell their house if mortgage rates remain high.
Â
Sarah Megginson, personal finance expert at Finder, said Australians who were counting on a rate cut by now have found themselves hung high and dry.
Â
"Many homeowners are stretched so thin financially, they're facing the prospect of having to sell their home, or they're turning to loved ones for support with paying their bills.
Â
"With interest rates projected to remain high until next year – and some even calling for a hike in August – mortgage holders could be waiting longer than they expected for this pressure to ease."
Â
Finder's research found 1 in 10 (11%) homeowners would have to move to an interest only mortgage if rates remain as high as they are, while 4% would need to borrow money to afford the mortgage repayments.
Â
A further 3% would have to rent out a room in their house, and 2% would be forced to ask for a repayment holiday.
Â
More than 2 in 5 (46%) reduced expenses elsewhere to compensate for higher mortgage payments, and 5% took on a second job to help with the extra cost.
Â
Separate Finder research found 1 in 5 (21%) mortgage holders have refinanced their home loan internally (i.e. with their current provider) in the past 12 months.
Â
The research found 1 in 7 (14%) did so to get a better interest rate, while 7% refinanced so that they could extend their loan term and reduce their monthly repayments.
Â
Megginson said financial stress is growing and could be exacerbated by the threat of potential hikes.
Â
"Now is the time to take a look at your budget and look for areas where you can save money on your household bills, and cut back on discretionary spending. A good place to start is insurance: car and home insurance premiums have skyrocketed over the last 12 months, so shopping around for a better deal is crucial.
Â
"If you're struggling to make your mortgage payments, communicate openly with your lender, as they will be able to offer hardship programs such as a mortgage holiday.
Â
"This can extend your loan term and add thousands of dollars to your original loan amount, so it costs more longer term, but as a short-term strategy it could keep you from losing your home.
Â
"Every bank has these hardship policies, so be upfront and transparent with them so you can get access to the best possible support."
Â
| Are you prepared for mortgage interest rates to remain high until 2025? | |
|---|---|
| No, I would have to go interest only | 11% |
| No, I would have to sell my house | 5% |
| No, I would have to borrow money to afford the mortgage | 4% |
| No, I would have to rent out a room in my house | 3% |
| No, I would be have to ask for a repayment holiday | 2% |
| No, I would default on my repayments | 1% |
| Yes, I've reduced expenses elsewhere | 46% |
| Yes, I can still comfortably cover the mortgage | 22% |
| Yes, I've taken on a second job to help with mortgage repayments | 5% |
| Source: Finder survey of 292 respondents with a home loan, May 2024 |
Â
| Have you internally refinanced your home loan in the past 12 months? | |
|---|---|
| Yes, to extend my loan term and reduce my repayments | 7% |
| Yes, to get a better interest rate | 14% |
| No | 79% |
| Source: Finder survey of 292 respondents who have a mortgage, May 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 1,012 respondents from May 2024, 292 of whom have a mortgage.
- The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics, an SAP company.
- The survey has been running monthly since May 2019.
Â
Find out if you're technically under mortgage stress and what you can do about it.
Ask a question