Key findings
Over 40% of homeowners are working overtime to make their mortgage repayments
Over half Australian homeowners are using more than 50% of their income to make repayments
Over 25% of homeowners are waiting on interest rates to drop before refinancing
Approximately 55% of homeowners have spent the last year cutting back on holidays, groceries and staying home more
Over 35% have cut back further in the last 3 months giving up gym memberships, time at the hair salon and streaming services
A quarter have cut alcohol, while 15% have cut steak, seafood and driving long distances
Over 10% have given up using ridesharing, hobbies and house cleaners
New research commissioned by Aussie has found over half of homeowners (52.5%) are suffering from mortgage stress, spending more than 50% of their income paying their mortgage with 16% stating they are struggling to make their repayments entirely due to the increased interest rates.
40% of homeowners have taken to working longer hours or overtime and 22% have even had to obtain a secondary job to make their budget stretch to cover the increased mortgage payments.
Despite this challenging environment, over 25% of homeowners are still waiting on interest rates to drop before refinancing.
Lendi Co-Founder and Aussie Chief Operating Officer Sebastian Watkins said, “This new Aussie data reflects the concerning financial stress faced by too many Australian homeowners as a knock-on effect from the interest rate increases. The cash rate is at its highest point in over a decade, and our data confirms that households are significantly burdened by the increase in their mortgage repayments.
“This is forcing many Australians to alter their lifestyles dramatically, and despite this over a quarter of homeowners are postponing refinancing in hopes of future interest rate reductions. We don’t know when the next interest rate drop will be, so in this uncertain environment Aussie is committed to implementing supportive measures and developing innovative solutions to help our homeowners manage these difficult economic times effectively.
“Brokers play a crucial role in this process, offering free guidance to homeowners. I strongly encourage anyone facing these challenges to reach out to a broker and explore the options available to them."
Aussie’s research reveals that these tough financial conditions have meant that over 32% of Australian homeowners have reduced contributions to their savings, while over 18% have stopped saving all together. Over 55% are cutting back on holidays and reducing spending on groceries.
As of 2024, discretionary spending from homeowners has also been curbed, with over 37% of homeowners giving up time at the hair salon, and over 35% cancelling their gym memberships. 37% have given up streaming services and subscriptions and nearly 50% have cut back on eating out.
RBA governor Michele Bullock recently echoed the stress in the housing market, stating financial conditions are restrictive enough despite the strength in equities, housing, and bank loans. “We think that financial conditions are particularly restrictive on households,” she said at a recent press conference.
Homeowners looking to take the next step in upgrading or updating their dwellings are also impacted with over 21% waiting for rates to drop before upgrading their home, and 19% waiting on an interest rate decrease before looking to renovate.
“In this higher rate market, borrowers need to be actively pursuing all avenues to alleviate their mortgage stress right now – and not waiting on a potential drop in rates,” said Sebastian Watkins.
“ABS data showed the national average interest rate for homeowners is currently 6.8% with an average mortgage size of $624,000. However, many lenders are offering rates from 5.99 to 6.4%, meaning an average homeowner with a $624,000 loan who refinanced right now, could save around $300 every month.
“These are significant savings which could make a key difference to the financial situation of many Australians, with new lender options available on the market to assist with this.”
-ENDS-
[1] The Aussie survey of 1,000 mortgage holders aged between 21-60 and was conducted online in April 2024. Results are weighted and representative of all Australian homeowners.