More than one in five mortgage holders admit they have taken on too much debt
Thousands of Australian mortgage holders now believe they have taken on more housing debt than they can comfortably manage, new survey findings from comparison site Finder suggest.
In a poll of 1,010 people, including 297 with a home loan, 19% of borrowers said they had borrowed too much. That proportion equates to about 627,000 homeowners nationwide who feel overextended on their mortgage.
Richard Whitten, home loans expert at Finder, said some entrants to the market had relied on the upper end of their borrowing power and were now under pressure as broader household costs have risen.
“Many Aussies who took out a loan at the top of their borrowing capacity are now finding themselves with a mortgage that’s pushing their budget to its limits,” Whitten (pictured right) noted. “When you layer home loan repayments on top of everything else – groceries, energy bills, insurance and more – the costs quickly add up.
“Homeowners are having to make some tough decisions – cutting back on essentials, dipping into emergency savings, or postponing major life plans just to keep up with their repayments.”
Finder’s Consumer Sentiment Tracker indicates that 37% of homeowners struggled to meet their mortgage obligations in November. For brokers and lenders, the data reinforces that a significant slice of borrowers are close to their financial limits.
Whitten noted that any future cash rate increases could have an immediate impact on these households. “Higher repayments leave even less room to save or manage financial shocks,” Whitten said.
He added that borrowers who were feeling the strain should review their home loan terms and consider switching if they could secure a lower rate.
“There’s never a bad time to refinance – if there are better offers out there, it’s a good time to switch,” Whitten stressed. “Shaving even half a percent off your interest rate can save you thousands of dollars.”
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