Buying Research

3 in 4 home owners gripped with mortgage anxiety amid rising rates, report shows

Rising rates are causing an increasing number of Aussies to feel anxious about their mortgages, a new report has revealed, with almost 30 per cent of property owners now dreading the possibility of defaulting on their home loans. 

New research from home loan broker Aussie Home Loans revealed that around 75 per cent of surveyed home owners stated that they are either uncertain about how the Reserve Bank of Australia’s (RBA) rate increases will affect their household budget or are in the dark on how the monetary policy tightening will impact them financially. 

The research further showed that anxiety bubbling from mortgage stress has led an alarming portion of mortgage holders to act like deer in headlights, with 86 per cent of surveyed home owners admitting that they have not taken any action to review their mortgages since the first RBA decision. 

Karen Sorrenti, the state broking manager at Aussie Home Loans, said the worrying figures indicate that most Australians are “ill-equipped and under-educated” on how to manage their home loans in the face of a rising rate environment.  

“[A] staggering number of mortgage holders have not taken action or investigated their alternative options which are key factors in addressing the mental and emotional strain,” Ms Sorrenti said. 

To back this observation, the expert highlighted that almost three in 10 mortgage holders (or 28 per cent) did not even consider that the cash rate would increase at all when crunching the numbers for a home loan, despite having to account for it in their home loan assessments. 

Meanwhile, another four in 10 or only 38 per cent of mortgage holders have financial buffers in place for the impact of a cash rate of 3 per cent or under, data showed.

“With the increased cost of living pressures, there’s no doubt this is a stressful time for many Australians, particularly mortgage holders,” Ms Sorrenti stated. 

Increasing anxiety among mortgage holders has also put a strain on home owners’ personal wellbeing and is now having a negative flow-on effect on household dynamics, according to Ms Sorrenti. 

“Our latest research shows almost one in five Australians (18 per cent) with mortgages are dealing with ‘significant mortgage stress’ and a further four in five (81 per cent) confirmed the rising cash rate and upward cost of living is a growing reality, placing unwanted tension on their household,” she stated. 

Further highlighting that there is an education gap among Aussies when it comes to managing mortgages, data showed that only one in seven or 14 per cent of mortgage holders have been on the front foot and have taken steps to review their home loans as soon as the first cash rate rise happened in May this year. 

She highlighted that home owners must have the initiative to reach out to professionals and do their research in order to know their options and take corrective steps that will help manage increasing costs of living and reduce anxiety.

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