Hungover by home loans: 1 in 3 face mortgage debt overload
Alarm bells are ringing for Aussie homeowners who say they took on too much debt, according to new research by Finder.
A Finder survey of 1,013 respondents – 331 of whom have a mortgage – revealed 1 in 3 (33%) think they borrowed too much on their home loan. That's up from 21% last year.
That's equivalent to more than 1 million homeowners who say they bit off more than they could chew.
Richard Whitten, home loans expert at Finder, said many borrowers are grappling with the debt they've taken on.
"Households are desperately trying to cut expenses or boost their income to avoid financial strain, but this financial safety net won't last forever.
"The good news is that interest rates could drop in the next couple of months – which would be a huge relief for those who overextended themselves."
Finder's research shows the younger generations are more likely to be in over their heads.
Almost half (46%) of gen Z say they stretched themselves thin, followed by millennials (37%). That's compared to 26% of gen X and 20% of baby boomers.
Whitten encouraged those who are struggling to get in touch with their lender as soon as possible.
"Take a fresh look at your situation and think about the best ways to alleviate mortgage stress.
"Refinancing is a great way to lower your interest rate and reduce your monthly repayments, saving you money over the length of your loan.
"Lenders may also be able to offer you interest-only payments for a temporary period or extend the mortgage term to lower monthly payments.
"This will cost you more interest in the long run, but can offer much needed relief in the short term."
Whitten said using the Finder Score is an excellent way to compare which home loan is right for you.
"If your home loan doesn't start with a Finder Score of 8 or 9, then you could be getting a better deal elsewhere.
"Our expert team has evaluated various products in our database, rating products with a score out of ten, with higher scores indicating better value."
Finder's research found 1 in 5 (20%) are now struggling with repayments as a result of borrowing more than they could afford.
A further 15% admitted they paid too much for what the house was worth and subsequently had to take out a larger loan to cover the costs.
| Do you think you borrowed too much on your home loan? | |
|---|---|
| Yes, I am struggling with repayments | 20% |
| Yes, I paid too much for what the house was worth | 15% |
| No | 67% |
| Source: Finder survey of 331 mortgage holders, September 2024 |
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 1,013 respondents, 331 of whom have a mortgage, from September 2024.
- The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics.
- The survey has been running monthly since May 2019.
Here's some tips for dealing with mortgage stress.