Rattled by rising rates: 165,000 homeowners may be forced to sell
Almost a million homeowners could be forced to take drastic action if interest rates remain elevated until next year, according to new research by Finder.
A Finder survey of 1,012 respondents – 292 of whom have a mortgage – revealed 27% (equivalent to 891,000 households) are not prepared for interest rates to remain high until 2025.
The research found 5% of homeowners – equivalent to 165,000 households – would have to sell their house if mortgage rates remain high.
Sarah Megginson, personal finance expert at Finder, said Australians who were counting on a rate cut by now have found themselves hung high and dry.
"Many homeowners are stretched so thin financially, they're facing the prospect of having to sell their home, or they're turning to loved ones for support with paying their bills.
"With interest rates projected to remain high until next year – and some even calling for a hike in August – mortgage holders could be waiting longer than they expected for this pressure to ease."
Finder's research found 1 in 10 (11%) homeowners would have to move to an interest only mortgage if rates remain as high as they are, while 4% would need to borrow money to afford the mortgage repayments.
A further 3% would have to rent out a room in their house, and 2% would be forced to ask for a repayment holiday.
More than 2 in 5 (46%) reduced expenses elsewhere to compensate for higher mortgage payments, and 5% took on a second job to help with the extra cost.
Separate Finder research found 1 in 5 (21%) mortgage holders have refinanced their home loan internally (i.e. with their current provider) in the past 12 months.
The research found 1 in 7 (14%) did so to get a better interest rate, while 7% refinanced so that they could extend their loan term and reduce their monthly repayments.
Megginson said financial stress is growing and could be exacerbated by the threat of potential hikes.
"Now is the time to take a look at your budget and look for areas where you can save money on your household bills, and cut back on discretionary spending. A good place to start is insurance: car and home insurance premiums have skyrocketed over the last 12 months, so shopping around for a better deal is crucial.
"If you're struggling to make your mortgage payments, communicate openly with your lender, as they will be able to offer hardship programs such as a mortgage holiday.
"This can extend your loan term and add thousands of dollars to your original loan amount, so it costs more longer term, but as a short-term strategy it could keep you from losing your home.
"Every bank has these hardship policies, so be upfront and transparent with them so you can get access to the best possible support."
| Are you prepared for mortgage interest rates to remain high until 2025? | |
|---|---|
| No, I would have to go interest only | 11% |
| No, I would have to sell my house | 5% |
| No, I would have to borrow money to afford the mortgage | 4% |
| No, I would have to rent out a room in my house | 3% |
| No, I would be have to ask for a repayment holiday | 2% |
| No, I would default on my repayments | 1% |
| Yes, I've reduced expenses elsewhere | 46% |
| Yes, I can still comfortably cover the mortgage | 22% |
| Yes, I've taken on a second job to help with mortgage repayments | 5% |
| Source: Finder survey of 292 respondents with a home loan, May 2024 |
| Have you internally refinanced your home loan in the past 12 months? | |
|---|---|
| Yes, to extend my loan term and reduce my repayments | 7% |
| Yes, to get a better interest rate | 14% |
| No | 79% |
| Source: Finder survey of 292 respondents who have a mortgage, May 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 1,012 respondents from May 2024, 292 of whom have a mortgage.
- The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics, an SAP company.
- The survey has been running monthly since May 2019.
Find out if you're technically under mortgage stress and what you can do about it.