Mortgage Holders Under Pressure: The Alarming Trend in Australia

A recent survey has revealed a disturbing trend in Australia’s mortgage market. One in five mortgage holders are now paying the bare minimum repayments on their home loan, a sign that many are struggling to cope with the rising interest rates.

A growing number of Australians are switching to interest-only repayments.

The Reserve Bank of Australia’s (RBA) interest rate hikes are continuing to squeeze borrowers, with more than half a million Aussie mortgage holders switching to interest-only repayments to ease budget pressures. This trend is a clear indication that many homeowners are feeling the pinch and are desperate to find ways to reduce their mortgage repayments.

“A further one in eight say they have extended their loan term in the last 12 months to bring down their repayments.” - Finder survey

The survey found that 6 per cent of respondents were currently still only paying the bare minimum in a “last ditch effort” to avoid falling behind on their repayments. This is a dire situation, and it’s essential that mortgage holders take a closer look at their finances to avoid getting trapped in a debt cycle.

A Record High for New Home Loans

The average new owner-occupier home loan has hit a record high, with the average borrower taking out a debt of $626,055 in May. This is the highest level in the Australian Bureau of Statistics (ABS) records, despite the fact that the cash rate is still sitting at its highest level in more than a decade.

The average new owner-occupier home loan has reached a record high in Australia.

New South Wales has the largest average mortgage at $767,584, while Victoria sits at $601,891 and Queensland at $586,627. These figures are a clear indication that the property market is still heating up, and it’s essential for buyers to do their due diligence before taking on a massive mortgage.

Conclusion

The rising interest rates and increasing mortgage repayments are putting pressure on many Australian households. It’s essential for mortgage holders to review their finances and explore options to reduce their repayments. With the property market still on the rise, it’s crucial for buyers to be cautious and avoid taking on too much debt.